This is a deeply disappointing move by Sen. Ron Wyden (D-OR). He has joined with Paul Ryan (R-WI) to push for a bipartisan “reform” of Medicare, but like every recent plan for Medicare the word “reform” just means “make it worse” for regular Americans.
While it is almost impossible to fully judge the proposal because it is comically vague on details, in the simplest terms the plan is to make Medicare more like Obamacare. Seniors would be forced to buy their insurance on a health care exchange that includes private plans and traditional Medicare. Just like with Obamacare, the amount of premium support seniors would get would be based on the cost of the second cheapest plan on the exchange and their income level.
This dangerously moves Medicare from a universal entitlement for all to a welfare style program. Such a move is likely to erode the programs broad popular support.
The logic behind this plan is that the economagic of insurance competition will reduce cost. This is and has always been a fantasy. We have tried health care exchanges repeatedly and they have always been a cost control failure. We tried it with Medicare Advantage and the program ended up costing the government billions. For decades we have had a health care exchange for federal employees and it has totally failed to keep costs down. The idea that seniors can understand the incredible complexity of insurance coverage and properly predict their future needs to make the economically correct choice is ridiculous.
Implementing this plan is almost assured to increase health care costs. Medicare will lose some market share and, as a result, its ability to negotiate lower rates. The system is almost guaranteed to be gamed by private companies trying to cherry pick customers. They say there will be risk adjustment mechanisms to prevent cherry picking but that is extremely difficult to implement, especially when you have lobbyists with billions of dollars of profit at stake fighting to shape obscure regulations.
When costs rise expect that to be passed onto seniors. Their “reform” plan would fix spending increase at inflation plus 1 percent. When it goes over that rate of increase, “Any increase over that cap will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums.” Translation: Seniors will be forced to pay more out of their own pockets.
It seems the big reason Wyden is supporting this proposal is that it also includes his beloved “free choice vouchers” that would allow employers to give their employees a voucher to buy insurance on the individual market. Even with the ACA in place, this provision would reward the healthy but likely leave the sick with even more medical bills.
In addition, if Paul Ryan succeeds in repealing ACA, then implementing this provision would likely be a total disaster for millions. Wyden has no guarantee from Ryan that the individual market protections necessary to make free choice vouchers even semi-viable would be left in place.
This bipartisan plan would be a big policy mistake hurting millions. While it is technically much less horrible than Ryan’s original plan for Medicare, it would still quickly accelerate the great shift risk. The burden of health care would be shifted more onto regular people who are expected to basically stand alone against the private insurance companies.
Beyond that, it is a huge political disaster for Democrats. Attacking Ryan’s plan to destroy Medicare has proven to be a real winner for Democrats. This move by Wyden gives Ryan and all Republicans a way out of the political quagmire they created, yet Wyden received no policy concessions for progressives. Ryan did not agree to not repeal ACA, make insurance universal or give everyone the choice of Medicare.
Almost everyone from regular working class Americans to his fellow Congressional Democrats should be extremely disappointed in Sen. Wyden for endorsing this stupid proposal he signed his name to. The only people who should be happy with him are, of course, the Republicans for saving them from political attacks and the for-profit health care industry for trying to expand their business.