|Ryan, 3/23/10: "Obamacare is a fiscal Frankenstein, it’s a train wreck."|
Despite the Republican propensity to compare the Affordable Care Act to something akin to the antichrist, word is that GOP budget leader, Rep. Paul Ryan (R-WI), will propose a dramatic change in the Medicare program that will closely mirror the key features of Obamacare – only for seniors.The columnist then asks, "Does this sound familiar?" Well, yes. It's a government subsidized exchange system following the model of what the GOP derisively dubbed "Obamacare" - the Affordable Care Act of 2010 that reformed our health insurance system for those under 65. But there's a poison pill in this "Ryancare" bill. A Congressional Budget Office study last November determined that seniors would likely either face higher premiums or less extensive coverage under Ryan's scheme to kill Medicare.
The proposal would do away with (for everyone presently under 55 years of age) the current single payer government system for senior medical care and replace it with a program whereby seniors would choose private health insurance coverage from a menu of approved private health insurers. The government would subsidize the program by giving seniors a voucher to be used in purchasing coverage, the amount of such payment to be defined according to need.
Forbes' Ungar explains:
Unfortunately, while Ryan has emulated a number of features from the ACA, he’s forgotten to make the adjustments the law makes to actually ensure that health care is more accessible to beneficiaries rather than more profitable to health insurance companies."Protect the richest elements of our society?" Ryan's philosophical soul-mate, Ayn Rand (we've noted here that Ryan passes out copies of "Atlas Shrugged" for study by all of his staffers) would be proud of the GOP's new budget czar.
Making private insurance work for the younger demographics is far easier than trying to make it work for the elderly due to the most basic tenant of health insurance – the insurance pool must be balanced by having 80 healthy people in the pool to pay for every 20 who are ill.
Given that most Americans 65 and older are a walking pre-existing medical condition, it is difficult to imagine how functioning insurance pools can be constructed from a universe filed with these people.
It is equally hard to see how health insurers could offer such a plan without severely restricting the benefits offered or, in the alternative, charging very large premiums – unless the government is prepared to put large enough subsidy checks in the pockets of the insurers to cover the extra costs.
We’ve tried the idea of inserting a middleman into the senior health care system and it did not work out well.
The Medicare Advantage program was created to do precisely what Rep. Ryan now wants to expand. Only with the MA programs, the government continued to bear the cost of senior care because the insurance companies knew that they could not.
The result was an 11% premium paid to the insurance companies for medical services provided when compared to the costs when Medicare paid directly for the same procedure or service.
Now that the ACA has put an end to this waste of money, many of the Medicare Advantage programs claim they will be going out of business because, without the government providing them with their profit, they can’t make it on their own – even though they were being reimbursed by Medicare for the costs incurred on behalf of their customers...
Given this history, it seems reasonable to ask why Rep. Ryan would seek to add another middleman to the equation – one with even greater responsibility to bear the medical costs that comes with aging while knowing that the government subsidies will be largely used to provide these insurance companies with a profit at the expense of the services needed by the senior beneficiaries?
I’ll leave it to you to answer that one. You might begin by reviewing health insurance company contributions to GOP campaign efforts.
We also know that Medicare runs at a low overhead cost of approximately 3% without the need to show a profit.
Can any private insurance company make such a claim? Considering that they are screaming bloody murder over the ACA’s requirement that they devote 80% of every premium dollar collected to actual medical care – leaving 20% for overhead and profit – it is safe to say that there is no chance they will ever approach the low overhead number achieved by the Medicare program.
So, who is going to pay for all this additional overhead and profit?
While the government subsidies, at the outset, would likely be designed to establish price points that most seniors could afford – while also providing the necessary money to allow insurers to make a profit – all bets would likely be off once a beneficiary gets sick. At that point, we can expect the premium costs to a sick senior to skyrocket – leaving our elderly incredibly vulnerable at the worst possible time in their life.
As most seniors do not earn a paycheck, it will not be a matter of re-budgeting their household costs to find a way to make their premium payments. The will simply have no way of affording high cost insurance premiums and will be left to face the consequences.
At the end of the day, it becomes difficult to escape the message of Rep. Ryan’s proposal – If you are old and lack wealth, you may be called upon to pay the price for our nation’s poor money management coupled with the GOP agenda to protect the richest elements of society...