Conservatives: Don’t Doctor The Ryan Plan

June 15th, 2011 at 1:17 pm | 43 Comments |

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How far will conservatives go to tell Republicans they must support the Ryan budget in its entirety? A new Weekly Standard piece on Senate candidate Mike Haridopolos gives a hint.

The editorial line taken with this piece suggests that every Republican has to support the Ryan budget in its entirety, and that any qualm or qualification is unacceptable..

Haridopolos is currently the president of the Florida state senate and is seeking the GOP nomination to be the 2012 United States Senate candidate. What sets Haridopolos apart from other GOP candidates is that he is not supporting the GOP budget as it is currently written.

In a recent op-ed Haridopolos explained that while the current GOP budget stops providing the current version of Medicare for those who are under 55 years old, he would extend that age range further downwards.

His op-ed does not give a number, but when FrumForum asked him about his position at an event in Washington DC, he suggested the changes in Medicare should apply to those who  are currently 40 or 45. He told the Weekly Standard this as well:

“Medicare is not a welfare program,” Haridopolos said today in an interview with The Weekly Standard. “It is a program that each one of us at this table will have paid 47 years of taxes for, and I’m a little reluctant to make that full jump.”

The 41-year-old said he thinks Medicare ought to be reformed for those closer to his own age, people who “have 25 years to prepare.”

“That’s roughly what we’re looking at,” Haridopolis said. “If we’re going to make that transition, let’s give someone the true time to prepare.”

The Weekly Standard took this information and ran with the headline:
Haridopolos: No Major Medicare Reforms for 25 Years

The piece said that Haridopolos “doubled down today on his opposition to Medicare reforms in the 2012 House Republican budget proposal”. Both Haridopoloscare and Ryancare work on the same principle: a vote is held now and Medicare is reformed for people who would qualify for the program at a later date.

If one wanted to be snarky, you could write a headline: “Ryan: No Major Medicare Reforms Until 2021” since that is the date when those who are currently 55 would start getting “Ryancare” as opposed the current version of Medicare. The fact is, both plans involve delayed change to Medicare.

Ironically, Haridopoloscare might be a better policy to run on as a candidate in Florida since its senior population might be scared by the Ryan budget. Haridopolos will be running in 2012 and Democrats can be expected to make a huge effort to run on the GOP budget — so it helps a GOP candidate to set himself apart from Ryan’s Medicare cuts.

Haridopolos told FrumForum that he supported the rest of the Ryan budget, particularly its tax reforms. In his op-ed, Haridopolos also agreed with the Republican position to repeal Obamacare and highlights how he wants to use a repeal to restore the funding to Medicare which has been cut.

In other words, he is with 80 percent of the rest of the Republican plan, yet this position is taken as “doubling down on his opposition to medicare reform”. It will be interesting to see how the Weekly Standard will report the different Medicare plans that the Republican presidential candidates will eventually produce.

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43 Comments so far ↓

  • Rob_654

    So in other words push it out beyond the scope of any currently elected Republican from ever having to deal with the consequences of it – talk about being gutless.

    If it is REALLY such a fantastic deal and such a great leap forward it is a shame to make people wait literally decades to be able to take advantage of the fantastic opportunities of moving fully into the private health care market.

    If its as good as Republicans are saying – they should push for a 5 year implementation so that Seniors and their kids can be thankful for the new opportunities which would certainly ensure a Republican SWEEP for decades to come.

  • LFC

    Republicans, the party that is both immune to and intensely afraid of actual debate.

  • think4yourself

    The Ryan plan is to in the future privatize it (great deal for the companies that get a piece of that action) and partially subsidize and hope that privatizing creates cost controls (but no proof of that) and requires the individuals to negotiate with the providers.

    My preference would be to start right away in slowly raising user participation (co-pays, especially with some means testing), and raising revenue by slightly increasing the payroll tax deduction. And get serious about fighting costs (a) lowering payments to doctors, not just promising to do that (b) investing resources to fight fraud (c) raising costs on “elective” type procedures.

    All the Ryan plan does is shift the costs to those less able to negotiate – disempowered seniors (I know, it’s not today’s seniors, but those who turn 55 in 10 years will still be seniors).

  • zephae

    At first, i thought the last name was “Hairdopolis” and thought of what a great title that would for a novel set in a dystopian future about a man trying to find his way in the dangerous field of competitive hair dressing.

    Actually, maybe that’d be better as an anime….

    • Danny_K

      At first, i thought the last name was “Hairdopolis” and thought of what a great title that would for a novel set in a dystopian future about a man trying to find his way in the dangerous field of competitive hair dressing.

      It would make a good Ayn Rand novel. Only one man dares to defy the Stylist Licensing Board…

  • Frumplestiltskin

    Rob_654, while I agree with your sentiment that the free market is either better then do it now, or it is worse so push it off till later. However, it omits the true Republican agenda, which is to do nothing, to let people fend for themselves completely, Ryan accomplishes this goal faster therefore the Haridopolis plan is better because it does give people time to prepare. If you tell a 25 year old he won’t get any Social Security at all but will have lower taxes throughout his life, he could deal with that. Do that to someone 50 years old and you will have stolen his half a lifetime of paying Social Security taxes for nothing.

    • balconesfault

      If you tell a 25 year old he won’t get any Social Security at all but will have lower taxes throughout his life, he could deal with that.

      No, he won’t be able to, if he’s of the population who truly does rely on SS.

      Because he buys the same food as everyone else who will have lower taxes … and food prices are driven in part by demand … so his food bills will go up.

      He spends on the same housing stock as everyone else who will have lower taxes … and housing prices are overwhelmingly driven by demand … so his housing bills will go up.

      Other portions of his consumer activity will see similar shifts along the price curve as he goes out to buy things that others with more money in their pockets are also trying to buy.

      At the end of the day … again, limiting ourselves to those who aren’t already socking away substantial 401Ks and other investments for their old age … he’s probably just going to hit age 65 with little or no savings to support himself on.

      One of the biggest problems with the free market is that once you’re finished with your productive years, the free market has little reason to care if you live or die (past your value as a consumer). Thus, salaries will always be maintained at the lowest level possible to obtain an adequate workforce, and goods and housing will always be priced at the highest level sustainable by the marketplace.

      And the poor people will end up with no additional wealth at the end of their productive years, because they had to spend it just to stay alive.

  • Watusie

    This is insanity. Leaving aside completely the issue of Medicare – the Ryan “Plan” is a fantasy built on economic and logical impossibilities.

    • Smargalicious

      ^Absurd comment.

      The Ryan plan is absolutely what we need to avoid becoming another Greece, you fool.

      • Watusie

        Please address the following assumptions that are essential to the working of the “Ryan Plan”:

        1) unemployment will drop to 2.8%. a) How is that possible? b)When has it happened before? c)why wouldn’t it spark massive inflation?

        2) tax cuts pay for themselves. Why would this be the case in the future when it has never been the case in the past?

        3) repealing the ACA will save $1.4 trillion. On what authority or model is he relying on on for this conclusion? The CBO says repealing the ACA it will COST $200 billion.

        4) there will be a sudden housing boom, starting next year. How is this possible given the massive backlog of foreclosures and unsold houses?

        5) the growth of the cost of Medicare or Medicaid will be reduced to the level of inflation. What is is going to cause this to happen?

        6) All nondefense discretionary spending can be reduced from the current 12 percent of GDP to 3 1/2 percent of GDP. How is this is supposed to be accomplished?

        • Smargalicious

          Republicans and Ryan happen to have reality on their side. Here’s a pointed response to your assumption #5…and remember what happens when you assume, watusie…

          Reality: It isn’t as if there is a choice between preserving Medicare “as we know it” and reform. Medicare is — to use the environmentalists’ favorite word — unsustainable. The trustee’s report issued last week puts the program’s unfunded liabilities at $24.6 trillion and projects the program going broke in 2024. Even Treasury Secretary Tim Geithner recognizes “the need to act sooner rather than later to make reforms to our entitlement programs.”

          Reality: Without reform, severe benefit cuts will be required in the Medicare program. Increased taxes simply will not cover the gap.

          Reality: The Ryan plan would not affect those 55 and older and would gradually shift from an open-ended entitlement (which pays all bills submitted and thus encourages overuse) to a “premium support” model that will encourage competition among private providers. It will provide less money to the wealthy and more to lower-income elderly.

          Reality: One of the biggest drivers of spiraling medical costs is the third-party payer problem. Both in the Medicare program and in employer-provided coverage, the patient himself has no incentive to shop around, and doctors are encouraged to order more and more tests and services because they are paid on a fee-for-service basis.

          Reality: The Democrats’ solution to rising Medicare costs is rationing. They deny it, but the Independent Payment Advisory Board (which will not come into existence until after the 2012 election), a 15-person panel created by Obamacare, would have virtually unreviewable discretion to set prices for medical services. While it’s technically true that the IPAB wouldn’t have the power to prevent doctors from performing services, the low reimbursement levels will surely dry up the number of doctors willing to take Medicare patients.

          Reality: The Democrats’ plan for a centralized, unaccountable, bureaucratic, price-controlling body for key medical decisions is precisely the sort of policy that has led European nations toward insolvency. Competition-oriented reform is not only the only possible way to save Medicare; it is the only way to preserve it.

        • balconesfault

          Reality: It isn’t as if there is a choice between preserving Medicare “as we know it” and reform. Medicare is — to use the environmentalists’ favorite word — unsustainable. The trustee’s report issued last week puts the program’s unfunded liabilities at $24.6 trillion and projects the program going broke in 2024. Even Treasury Secretary Tim Geithner recognizes “the need to act sooner rather than later to make reforms to our entitlement programs.”

          We should be dealing with the original sin that blew up the Medicare budget – Bush’s Medicare Drug Benefit, passed without any new revenue streams to pay for it.

          There should be a national conversation – “Can We Afford the Drug Benefit?” If we’re not willing to raise taxes to pay for it, then we need to eliminate it.

          Reality: The Democrats’ solution to rising Medicare costs is rationing. They deny it, but the Independent Payment Advisory Board (which will not come into existence until after the 2012 election), a 15-person panel created by Obamacare, would have virtually unreviewable discretion to set prices for medical services. While it’s technically true that the IPAB wouldn’t have the power to prevent doctors from performing services, the low reimbursement levels will surely dry up the number of doctors willing to take Medicare patients.

          If patients can’t find doctors willing to accept the reimbursement levels, it’s time for the Government to hire doctors and set up clinics.

        • Watusie

          Smarg, I gave you 6 things. You cut and pasted a non-responsive response to one of them.

          Fail.

        • Grace

          Watusie -

          “3) repealing the ACA will save $1.4 trillion. On what authority or model is he relying on on for this conclusion? ”

          if the ACA is repealed, wouldn’t its protections againts denial for pre-existing conditions and recsissions also be eliminated? if so, wouldn’t only a vanishingly small number of elderly people even be able to buy insurance, at any price? Maybe the alleged savings come from the fact that only perhaps 0.5% of the elderly could even hope to use a voucher to buy coverage and at some point every elderly person would have their coverage rescinded when they become too expensive to the insurer?

        • torourke

          Grace,

          Paul Ryan’s plan for Medicare would also feature guaranteed issue and community rating. Given that being elderly is itself a pre-existing condition, that makes sense.

  • Sidfinkel

    The point about implementing it in 5 years is a good one. Why do Republicans want to deny the great benefits of choice, lower costs, and better medicine for ten years?

    This site here has some pretty good points.

    http://dismalpoliticaleconomist.blogspot.com/2011/06/question-to-paul-ryan-if-private.html

  • ottovbvs

    Democrats can only be happy that Republicans are strongly embracing the Ryan plan to voucherize Medicare effectively bringing the program to an end. If this is what they want to fight the 2012 election on it’s fine by me. It’s futile arguing with the usual suspects with their phony talking points, you either favor govt sponsored universal health care for the elderly or you don’t. Every other industrialized society in the world seems to manage it just fine but apparently it’s beyond the reach of we incredibly exceptional Americans and we have an ideologically rigid party in the US that wants to get rid of it. Let the voters decide what’s best for them.

  • LFC

    “Republicans and Ryan happen to have reality on their side. “

    Quite possible the most unrealistic statement ever written here.

    And Smarg didn’t even attempt to tap dance around the questions about Ryan’s insane assumptions. He just ignored them. His list of GOP talking points for the only thing he did attempt to address was just pathetic. I guess he doesn’t understand that a plan that is completely based upon fantasy is not better than no plan at all.

    “The Democrats’ solution to rising Medicare costs is rationing.”

    Hey, Smarg. A board that sets reimbursement rates for Medicare is rationing, but a department of a private health insurance company that sets reimbursement rates for their health plans is doing what exactly?

    As to shopping around for doctors and services, there has been an abundance of articles written on why standard market forces don’t work for health care. Hint: If I’ve been in an auto accident and require emergency surgery, I’m not going to be questioning the surgeon about how much he charges, then doing web searches to find all the surrounding hospitals, and then calling them to see if they can get me in. Another Hint: Once you’re past a simple procedure with zero complications, it’s impossible for a layperson to understand what actually goes into their treatment.

    But hey, you have “reality” on your side. (Cue Twilight Zone theme.)

  • Diomedes

    Guys, is there any chance you all could stop feeding the Smarg Troll? All you are doing is enabling him.

    • ottovbvs

      All you are doing is enabling him.

      Couldn’t agree more. He’s either off his head or quite probably sitting in some little Republican boiler room trolling sites like this. Either way he’s not worth an iota of energy.

      • Traveler

        Hey,

        That Adblocker that TRS mentioned really works. I love not seeing the troll except in replies.

  • Frumplestiltskin

    balcone, I agree with what you wrote, I said young people “could” not “would” deal with it. My main point is that Haridopolis makes more sense than Ryan, not that I agree with him. Both Social Security and Medicare can be fixed via conventional means, and if not in the future there will be rationing. If I receive only 80% of what I expect now, that is still 80% better than the Republican proposal to give that money to the rich via upper class tax cuts.

  • nickthap

    He’s probably a government worker on disability.

    • ottovbvs

      Actually he’s probably 22 years old, went to some third rate university like Regent, can’t get a real job, and is being paid by the word to pour out this nonsense. I don’t think DF should pull the plug on him because I do believe strongly in the 1st but essentially he’s like dog poop on the pavement. To be avoided. He’s an insult to the intelligence so god knows why people as perceptive as Balconesfault waste time on this nonsense.

      • zephae

        ” and is being paid by the word to pour out this nonsense.”

        Amazon Mechanical Turk I guess?

        I agree that DF should pet Smarg stick around (his stupidity gives me a chuckle every now and again), especially when you have people like nhthinker who are serious and even dumber than his caricature.

        • ottovbvs

          especially when you have people like nhthinker who are serious and even dumber than his caricature.

          He’s got it bad but honestly are there ANY reasonably sensible conservatives posting here. The poverty of the advocacy for conservative positions is appalling. Most of them are nuts to a greater or lesser degree.

        • Traveler

          It is truly pathetic. We are just a bunch of dirty libruhls with little in the way of fundamental differences of opinion. I would love to see an Ottovon for the conservative side tangle with you. But alas, not to be, due to the utter poverty of economic and social ideas from there. At least DSP, NA, and Sinz occasionally rise to the level of reasonable perspectives.

          Edit: I will also say that torourke is on the money (below).

  • Rabiner

    Why support reforming Medicare in 25 years but be for repealing any cost savings to the program in the ACA that would occur now over the next 10 years?

  • torourke

    Balconesfault,

    “We should be dealing with the original sin that blew up the Medicare budget – Bush’s Medicare Drug Benefit, passed without any new revenue streams to pay for it.

    There should be a national conversation – “Can We Afford the Drug Benefit?” If we’re not willing to raise taxes to pay for it, then we need to eliminate it.”

    You’ve posted this several times, and it is flat out wrong. I’m not going to defend Medicare Part D from a fiscal point of view, but the idea that this program is what has caused the looming insolvency of the other components of Medicare is pure fantasy. We have known for a long time that Medicare Parts A and B (what everyone means when they discuss this issue) were fiscal disasters. The Republicans tried slowing the growth of these two programs under Gingrich in the 1990′s, and the Democrats effectively Mediscared that attempt to death. There are a few primary problems with the funding of Medicare Parts A and B: the ratio of workers paying payroll taxes into the program vs. retirees withdrawing from the program is down from 17 to 1 to now 3 to 1. Within the next few decades it will be down to 2 to 1. Add in the explosion of costs due to advancing technology and the idiotic fee-for-service structure, and you begin to get at the problem. We would have this problem even if Medicare Part D were never created.

    Furthermore, the notion that Democrats opposed Medicare Part D because it was not paid for it also a fantasy. They were not proposing offsetting tax hikes or spending cuts to fund the program, they wanted to model it after the same idiotic fee-for-service model of the other programs that have become unsustainable. They were also upset that the Republicans would get the credit for passing this bill before the 2004 election boosting Bush’s re-election chances. They should have been pleased that the ostensibly conservative party was adding a new entitlement to the mix. Talk about an ideological victory for progressives.

    “If patients can’t find doctors willing to accept the reimbursement levels, it’s time for the Government to hire doctors and set up clinics.”

    This is really confused. The Democrats’ plan to tackle the exploding costs of Medicare, and to prevent its looming insolvency, is to simply slash reimbursement rates to levels below that which Medicaid is reimbursed. Doctors will simply stop seeing Medicare patients the way they are with Medicaid patients, and these elderly folks–who vote in high numbers–will scream until those rates are pushed back to where they were before. Creating a whole new government program to treat those who couldn’t find a doctor defeats the purpose of slashing the reimbursement rates to begin with–cutting costs. Whether the reimbursement rates are moved back up or we try your idea, we’re back to square one. But as Richard Foster of the CMS has written in his most recent report, the Medicare Trust Fund will almost certainly run out even sooner than 2024. So we’re left with a few options. Massive tax hikes on the rich and the middle class to fund the health care of the exploding retiree population, some sort of means-testing program, or rationing to the extreme. It will probably be some combination of the three the longer we wait to address this problem.

    • zephae

      So we’re left with a few options. Massive tax hikes on the rich and the middle class to fund the health care of the exploding retiree population, some sort of means-testing program, or rationing to the extreme.

      Since the central problem of the medical system that you seem to be pointing out is the fee-for-service structure, how is revamping that aspect of the system not one of the options? Single-payer is also an option as it would much more effectively diffuse the concentrated high costs of programs like Medicare and Medicaid because of the populations they serve.

  • torourke

    zephae,

    We should move from the defined benefit, fee-for-service model, which is what Paul Ryan’s plan would do. We should also means test, which is what Paul Ryan’s plan would do. The plan is not perfect, and Watusie scores some real points in the assumptions built into the plan, but to me it is the start of the only solution that makes sense.

    I don’t understand your suggestion that Medicare be converted into a single-payer system. It already is a single-payer system.

    • zephae

      We should move from the defined benefit, fee-for-service model, which is what Paul Ryan’s plan would do.

      No it doesn’t. It simply further perpetuates it to a privatized extreme. Just because it burdens the individual with more of the costs doesn’t mean it’s not fee-for-service. If you’ve got a source or a quote that shows his plan turning to an outcome-based model, I’d love to see it.

      We should also means test, which is what Paul Ryan’s plan would do.

      I can agree with this only if you assume the program remains pretty much unchanged and the threshold is set very high. However, there is no advantage to a privatized insurance model in the healthcare industry in the context of mandated emergency care. I have never heard of an industry that had a sudden boom of success because of innovations in the billing department.

      I don’t understand your suggestion that Medicare be converted into a single-payer system. It already is a single-payer system.

      I’m not saying turn Medicare into single-payer, I’m saying turn the whole insurance industry into single-payer. It’s the only thing that makes sense to me if you’re going to mandate ER services. And btw, calling the Ryan Plan “imperfect” is like calling a sewage treatment plant “smelly.” Then again, it’s an ideological statement, not really a “plan” per se.

      • torourke

        zephae,

        “No it doesn’t. It simply further perpetuates it to a privatized extreme. Just because it burdens the individual with more of the costs doesn’t mean it’s not fee-for-service. If you’ve got a source or a quote that shows his plan turning to an outcome-based model, I’d love to see it.”

        I’m not sure you understand what fee-for-service means. In Medicare, the federal government pays for a large portion of any hospital stay or service a doctor provides to a retiree. Payment is provided regardless of how effective the treatment might be. This has led to what what Derek Thompson over at the Atlantic describes as a “porschification” of health care for retirees.

        http://www.theatlantic.com/business/archive/2011/05/what-paul-ryans-great-medicare-message-gets-wrong-about-medicare/239518/

        This is also referred to as the defined benefit system. There is absolutely no incentive for doctors to be cost-conscious, to be more innovative, etc. when they are reimbursed for everything they provide no questions asked. Ryan’s plan would move to a defined contribution plan. The federal government would give you a fixed amount of money (more if you are poor, less if you are wealthy), and force doctors and health insurers to compete, innovate, be cost-conscious, etc. to give the elderly the most bang for their buck. Now Thompson thinks this is risky, but compared to what? The unfunded liability of Medicare is in the tens of trillions of dollars. At current pace our entitlements will cost as much as our entire economy within two decades, meaning we would have to borrow money to pay for discretionary spending. Either we move to a defined-contribution plan that involves means-testing, or we are left with massive tax hikes on the middle class (there are simply not enough rich people to cover tens of trillions of dollars), massive rationing, or both. Unless you can think of something else.

        “I’m not saying turn Medicare into single-payer, I’m saying turn the whole insurance industry into single-payer. It’s the only thing that makes sense to me if you’re going to mandate ER services. ”

        But if Medicare is a single-payer system already, and it is hurtling towards insolvency at an accelerating pace, why would you want to move everyone else into that model? Medicare will not be able to meet its liabilities for the elderly generation in about decade or so, how will adding over a hundred million people to those rolls make the problem better? And please don’t tell me that it would work because the young and healthy would be “paying in” to the system to offset those costs. They already “pay in” to the system through their payroll taxes. That’s how the program is funded after all.

    • Grace

      torourke,

      Thx for your response to me above, re guaranteed issue and community rating. I had assumed that repeal of ACA would mean a return to the status quo.

      You seem like a reasonable and well-informed person on this topic. Given that you acknowledged watusie’s points about the fantasyland assumptions built into the Ryan plan, if the Dems were to seriously consider a voucher system a la Ryan, would you accept modest tax increases to enact a Ryan plan built on reality-based assumptions, in order not to increase the deficit as Ryan would based even on Ryan’s fantasy numbers?

      I ask because I’m frustrated by GOP resistance even to ending subsidies, tax breaks, credits, etc., if His Holiness Grover Norquist deems the action a ‘tax increase.’ I’m astounded that people vote for candidates who make pledges to unelected lobbyists, which then takes precedence over any and all constituent concerns or the national interest as a whole. I’m interested in your take on whether any tax increase of any type can occur to fund senior health care for the next few decades.

      • torourke

        Grace,

        Thanks for the reply. Here are the tax increases I would welcome, and I’m pretty sure Paul Ryan would welcome too. I know he favors the first one.

        1. Ending the tax break for employers who provide health insurance to their employees. This was the centerpiece of John McCain’s health proposals in 2008, and Obama attacked it as a huge tax increase, which it would be. But that tax loophole distorts our private health insurance system in a bad way, benefitting large companies over small businesses and individuals.

        2. I would phase out the mortgage deduction.

        3. I wold end the deduction for state and local taxes.

        4. I would be open to raising the ceiling on which payroll taxes were collected.

        I’m not a big fan of Grover Norquist, but his influence on the GOP seems to be waning. See the vote on the ethanol subsidies the other day where 34 GOP senators defied him. Not all tax hikes are created equal, and I think serious people like Tom Coburn (I voted for him in 2004, and it was the greatest vote I ever cast) recognize that to reach a deal on entitlements means eliminating harmful tax deductions and loopholes, which would amount to tax increases. But when we are discussing unfunded liabilities to the tune of tens of trillions of dollars, there are no tax hikes that will be enough to cover this amount. We need to attack the spending part of it, and I think Paul Ryan’s plan should be the starting point for this conversation.

        • Traveler

          torouke,

          ^+1.

          I wish it was your plan that was put on the table. Then lets the Bush cuts expire, and eliminate more subsidies while we are at it. Think ag, oil and trucking (roads). I think most everyone here would concur with these positions. Voila, much less deficit. (Did you ever play with that NYT deficit calculator? Very informative.)

          But the sad fact is that what you propose would never pass the troglodytes, including Coburn. Nice try to say Ryan would go along, but pretty wishful thinking to me.

  • Bunker555

    Grover Norquist has the GOP by the b*lls.

  • zephae

    Torourke,

    I’m not sure you understand what fee-for-service means.

    Actually I think it’s you who is confused on that account. Fee-for-service is exactly what it sounds like: you pay a fee for each service, or sometimes set of services (like MedExpress), a hospital provides. Both Medicare and private insurance run on fee-for-service models. Look at your hospital bill next time and you’ll see all the itemized charges. This means that the premium-support model that Ryan favors, which simply unloads seniors into the private market, does absolutely nothing to fix that structure.

    The federal government would give you a fixed amount of money (more if you are poor, less if you are wealthy), and force doctors and health insurers to compete, innovate, be cost-conscious, etc. to give the elderly the most bang for their buck.

    Yes, a fixed amount of money which you then supplement with your own cash, meaning that the cost of insurance will not be very responsive to the amount of money given by the government. Instead, the insurance industry will do what they always do and charge you mainly based on the risk you add to their system. Since the elderly are the highest-costing demographic for healthcare, their premiums are going to be much higher and the government support will fall far short of the costs. Being forced to pay an extra $6,000 a year for medical insurance is pretty tough for seniors on fixed incomes, even if you give them 9-10 years to prepare.

    Now, while I would agree that the increased competition (which is also included in Obama’s ACA through the insurance exchanges that show up in 2014) and having seniors shop around will put some downward pressure on private costs, the fact is that public models have much lower overhead and already give much better care for the money than Medicare’s private sector equivalents. Also, why do you think private insurers will “innovate”? They are merely the payment arm of the industry. Do you really think you’re going to see innovations in billing and risk assessment that will dramatically reduce costs? Do you really think private insurance is already that bad at math?

    But if Medicare is a single-payer system already, and it is hurtling towards insolvency at an accelerating pace, why would you want to move everyone else into that model?

    Because it costs a whole lot less than private insurance. Medicare is not in financial trouble because public insurance costs too much. It’s in trouble because system-wide medical costs keep skyrocketing and since seniors are the most expensive group to cover, Medicare gets hit with a double-whammy. Simply switching over to a private model does absolutely nothing to change that reality.

    how will adding over a hundred million people to those rolls make the problem better?

    It will more effectively pool risk, allowing for much easier adjustments in tax rates and service provisions, as well as provide the nation with much greater bargaining power with providers. Have you ever looked at a hospital bill before? If you have, you should’ve noticed that there are three parts to the final total: the amount the hospital charges for the services provided, the amount that the hospital is contractually allowed to charge the insurance company for those services, and the amount you pay the insurance company. That second portion in bold is the due to the large numbers of subscribers it has (rates correspond more to avg. risk per subscriber instead of your individual risk). The younger and healthier pay more in insurance rates than they would individually so that they off-set the costs of more risky (older) subscribers, keeping those rates somewhat affordable. That’s one of the key advantages that single-payer takes to the extreme and it’s a big reason why single-payer makes more sense than private insurance.

    BTW, even in single-payer, private insurance doesn’t go away entirely. You would still have supplemental plans that would cover things left out by the government.

  • torourke

    zephae:

    “Actually I think it’s you who is confused on that account. Fee-for-service is exactly what it sounds like: you pay a fee for each service, or sometimes set of services (like MedExpress), a hospital provides. Both Medicare and private insurance run on fee-for-service models. Look at your hospital bill next time and you’ll see all the itemized charges. This means that the premium-support model that Ryan favors, which simply unloads seniors into the private market, does absolutely nothing to fix that structure.”

    Paul Ryan’s plan would not directly re-structure the private insurance model (which I’m not about to defend), but it would end the fee-for-service model that exists in Medicare, which you seem to acknowledge in the first sentence of your following paragraph:

    “Yes, a fixed amount of money which you then supplement with your own cash, meaning that the cost of insurance will not be very responsive to the amount of money given by the government.”

    If you acknowledge that the government would only provide a fixed amount to a retiree, instead of paying for most of every medical service they seek, then you are acknowledging that Paul Ryan’s plan ends the FFS model in Medicare we are discussing.

    “Instead, the insurance industry will do what they always do and charge you mainly based on the risk you add to their system. Since the elderly are the highest-costing demographic for healthcare, their premiums are going to be much higher and the government support will fall far short of the costs. Being forced to pay an extra $6,000 a year for medical insurance is pretty tough for seniors on fixed incomes, even if you give them 9-10 years to prepare.”

    You may be right, but if private companies have to compete for the services of retirees, they have an acutal incentive to provide the best care for the most reasonable price. It is hard to predict how innovative and cost conscious private insurance companies will become once they have the incentive to do so. Which is to say, it’s difficult to predict how much the elderly will have to pay out of pocket in the future under the Ryan plan. The CBO doesn’t know how to predict this, so it simply assumes that there will be no cost savings as a result of the increased competition. Richard Foster, the chief actuary of Medicare, did say that Ryan’s plan would be more likely to reduce costs than what’s in Obamacare. It’s not hard to predict what will happen under the current model, where health care providers have no incentive to compete, innovate, etc.

    “Now, while I would agree that the increased competition (which is also included in Obama’s ACA through the insurance exchanges that show up in 2014) and having seniors shop around will put some downward pressure on private costs, the fact is that public models have much lower overhead and already give much better care for the money than Medicare’s private sector equivalents.

    I would like to see some sources for the notion that Medicare provides better care for the cost than Medicare Advantage or something similar. And one of the main reasons that Medicare has lower overhead than private companies is that they don’t spend much on things like combatting Medicare fraud, which costs taxpayers $60 billion a year (a number that dwarfs the combined profits of the largest private insurers). People who promote the Medicare model tend to ignore these costs, but they are real. Medicare also involves price controls, as the government reimburses doctors at lower rates than private insurers do (which is another reason why doctors have an incentive to provide more care, to make up for the money they lose from Medicare payment fees.) But as payment rates are slashed as they are set to do under Obamacare, doctors will simply do what they are doing with Medicaid–stop accepting patients on those plans. When people say that Medicare is “cheaper”, they are ignoring the hidden costs associated with price controls, but those costs don’t disappear.

    “Because it costs a whole lot less than private insurance. Medicare is not in financial trouble because public insurance costs too much. It’s in trouble because system-wide medical costs keep skyrocketing and since seniors are the most expensive group to cover, Medicare gets hit with a double-whammy. Simply switching over to a private model does absolutely nothing to change that reality.”

    Again, it doesn’t cost less if you consider the hidden costs associated with price controls and that Medicare doesn’t give a flip about rooting out Medicare fraud. And the reason why costs are exploding is because of demographic trends and the fact that there is absolutely no incentive to be conscious as Medicare is currently structured.

    “It will more effectively pool risk, allowing for much easier adjustments in tax rates and service provisions, as well as provide the nation with much greater bargaining power with providers.”

    The current payroll taxes that fund Medicare no longer cover the elderly population, which is why the Medicare Trust Fund is running out of money. Adding over one hundred million people to this program would mean that the money would run out even faster, unless you dramatically increase payroll taxes, a tax that falls disproportionately on the lower and middle classes.

    • Grace

      torourke, you said:

      ” And one of the main reasons that Medicare has lower overhead than private companies is that they don’t spend much on things like combatting Medicare fraud, which costs taxpayers $60 billion a year (a number that dwarfs the combined profits of the largest private insurers).” Can you provide a cite for that $60 billion stat?

      I’m not in the medical or policy fields — strictly a layman who is motivated to learn much more by virtue of being 52 and therefore potentially subject to RyanCare, so I really have a dog in this hunt as a cancer survivor and someone without a great family history on some expensive medical conditions (heart, diabetes). So much of this debate seems to hinge not only on ideology but often conflicting stats and claims that are very difficult for the average person to wade through.

      I’d be interested in hearing from you or anyone else about something that has puzzled me in all these debates. I hear little to nothing about ideas to address the supply side of the equation. All debate seems to focus on reducing demand through self-rationing or government rationing. Since we could also address it on the supply side — more providers, more competition — and in the process improve employment to boot, why is that not discussed more? It seemed to me that a great use of stimulus funds would have been to build 20 new medical schools and a slew of new medical-related technical schools. Put construction to work building the schools, medical-device suppliers to work outfitting the schools, doctors and technicians to work instructing a wave of new students, and eventually produce a big wave of additional providers to expand supply to help meet demand. Creating hundreds of new hospitals, doctors, testing facilities, etc., would surely help rein in costs by having more competition and could employ hundreds of thousands (if not more)? I know that one cost that leads doctors to feel they have to charge at a certain minimum rate is the very high cost of attending medical school and the huge loan balances that most doctors have to repay after school. Why not provide more subsidy to well-qualified students so they don’t graduate with outrageous loan balances and wouldn’t suffer a tremendous financial hit if they charged lower rates? Just really, really curious what the impediments are that seem to result in next to no discussion of increasing supply, as opposed to what seems to be working strictly on reducing demand?

    • zephae

      Torourke:

      Paul Ryan’s plan would not directly re-structure the private insurance model (which I’m not about to defend), but it would end the fee-for-service model that exists in Medicare, which you seem to acknowledge in the first sentence of your following paragraph:

      Yes, and let me concede a point back to you. You’re right that the FFS structure is not as prevalent in private insurance as opposed to the public models which are all FFS (Medicare Advantage included). My private insurance and most of the people I know have FFS plans, but I was under an incorrect assumption. However, the managed care capitation models have not managed to hold down cost growth or provide superior outcomes. In fact, costs for private insurance have risen faster than public structures (sources for this below).

      I would like to see some sources for the notion that Medicare provides better care for the cost than Medicare Advantage or something similar.

      http://krugman.blogs.nytimes.com/2009/07/29/medicare-versus-insurers/
      http://www.nytimes.com/2011/06/13/opinion/13krugman.html?_r=2&hp
      http://www.commonwealthfund.org/Content/Publications/In-the-Literature/2002/Oct/Medicare-vs–Private-Insurance–Rhetoric-and-Reality.aspx
      http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf
      http://healthaffairs.org/blog/2011/06/16/health-policy-brief-medicare-advantage/

      Now, would you be so kind as to provide some sources for this claim:

      And one of the main reasons that Medicare has lower overhead than private companies is that they don’t spend much on things like combatting Medicare fraud, which costs taxpayers $60 billion a year (a number that dwarfs the combined profits of the largest private insurers).

      Medicare also involves price controls, as the government reimburses doctors at lower rates than private insurers do…But as payment rates are slashed as they are set to do under Obamacare, doctors will simply do what they are doing with Medicaid–stop accepting patients on those plans.

      As I said before, private insurers institute price controls as well through their contracts with participating hospitals, a point of mine that you seem to have ignored. They use the number of subscribers they have as a bargaining chip to bring down the costs that hospitals charge them, same as public systems. If the insurance companies demand prices that the providers determine is too low, they tell the insurance company to go elsewhere. The problem is the private insurance is in a situation where they have greater incentives than the government to pay more (smaller sizes, profits, etc.). It’s the same thing with “rationing.” All companies and plans, public and private, ration to a certain extent, all we’re arguing about is the degree to which and manner in which it is done.

      And the reason why costs are exploding is because of demographic trends and the fact that there is absolutely no incentive to be conscious as Medicare is currently structured.

      Thank you for conceding the point on demographics. Medicare is getting hammered twice: once on increasing costs, and again on insuring the most expensive demographic; one that is also growing. The cost-consciousness aspect is more pronounced in the public sector because of FFS, but the private sector experiences that problem too. The healthcare industry is just one in which it is very difficult to be cost-conscious because of its complexity and that you’re weighing costs against your health and life instead of simply your budget.

      The current payroll taxes that fund Medicare no longer cover the elderly population, which is why the Medicare Trust Fund is running out of money. Adding over one hundred million people to this program would mean that the money would run out even faster, unless you dramatically increase payroll taxes, a tax that falls disproportionately on the lower and middle classes.

      Or just use a different funding source(s) than simply payroll taxes. Where is it written in stone that these benefits must be paid for by payroll taxes alone? The idea that we’ll never find the tax revenue to pay for something like single-payer, especially since it would remove those costs from private industry, sound a bit silly to me.

  • torourke

    Grace,

    I don’t have a lot of time to respond, so here is the source for the $60 billion claim:

    http://www.weeklystandard.com/weblogs/TWSFP/2009/10/post_145.asp

    If you don’t find the Weekly Standard credible, then just follow the links, because Anderson draws this number from 60 Minutes and a report from the Washington Post.

    I’ll try to get back to you later but a quick glance at your last paragraph has me agreeing with you.

    • zephae

      “I don’t have a lot of time to respond”

      It’s a forum, man, we’re not running on a deadline here or anything. Thanks for the link.