Paul Ryan’s Republican budget proposal “saves” the government money on Medicare by replacing it with a voucher to buy private insurance, but these vouchers will be too small to actually buy a similar level of coverage to what Medicare traditionally provided.
It shifts the burden of paying for the rise in health care costs for the elderly on to the backs of seniors citizen. To add insult to injury, the horrible design of the plan will also make overall health care spending on the elderly grow at an even faster rate, according to the CBO (PDF).
A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.
Moreover, CBO projects that total health care spending for a typical beneficiary covered by the standardized benefit under the proposal would grow faster than such spending for the same beneficiary in traditional Medicare under either of CBO’s longterm scenarios. For the period before 2030, the difference in projected growth rates occurs primarily because CBO expects that the payments to providers in Medicare will grow more slowly (especially under the extended-baseline scenario) than those in the private market.
This is a double slap in the face for older Americans. Ryan is not only making seniors shoulder the burden of rising health care costs for covering the elderly, at the same time, his plan is going to make that burden seniors will need to carry grow even larger at a faster rate.
Ryan’s plan doesn’t reduce health care costs for seniors. All it does is “save” the government money by leaving our parents and grandparents buried in medical bills, bills that are now larger thanks to Ryan’s terrible privatization plan.