Paul Ryan’s GOP budget layout to lower the federal deficit has met stern resistance from constituents fearing that Medicare as we know will cease to exist not only for them but for future generations. Ryan claims that “people … don’t understand what we’re doing with Medicare. What I find is there’s a lot of demagoguery and distortion occurring.”
But that’s not completely true. To project as Ryan does that his plan is a practical approach to curing what ails Medicare and Medicaid takes a look at the problem from only one perspective – cutting spending. His plan does nothing to curb rising health care costs in this country and it ignores creating revenues to sustain this health insurance option for people who are on fixed incomes and cannot afford private insurance premiums.
Perhaps the biggest obstacle to reform health care costs and cover low-income people is allowing a system of medical services in this country to fall under the auspices of free-market practices. The free-market system that encourages innovation and competition is a functional economic system that works very well in most areas. But the principles that work well for commercial goods and services do not automatically transfer over to health care.
One of the problems that tends to occur is that market forces make no serious attempt to control how for-profit increases negatively impact low-income people. When private insurers put their profits before service that means some people will not be able to afford their product. There are higher health risks for certain groups like seniors, children and the disabled. Market practices insure that costs to sustain profitability must rise with these groups, the very people who often lack the financial means to meet cost increases.
With Paul Ryan restructuring Medicare and Medicaid with what he terms as a “premium-support payments” program, where states determine who is and who is not eligible, there is nothing incorporated in this plan that accounts for the rise of private health care costs that will exceed the pace of normal inflation rates. According to the impartial Congressional Budget Office’s estimates,
Under [Ryan’s] proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary’s spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s spend- ing would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario.
Federal payments for Medicaid under [Ryan’s] proposal would be substantially smaller than currently projected amounts. States would have additional flexibility to design and manage their Medicaid programs, and they might achieve greater efficiencies in the delivery of care than under current law. Even with additional flexibility, however, the large projected reduction in payments would probably require states to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law.
A critical point that we can take from this is how dependent Medicare recipients will be on state authority “to design and manage their Medicaid programs”. In states like Texas where social aid programs are always trimmed to the bone to correct budget shortfalls, this plan is likely to hurt even more people than will occur due to the increased individual spending it is set to impose on them.
What’s obviously missing in Ryan’s plan where he could be accused of demagoguery is the failure to generate revenue to offset costs. The demagoguery that Ryan and the GOP would put into play is that this would raise taxes and hurt more than help those low-income people this plan is designed to benefit. Yet, no taxes need to be created for this and surely most low and middle-income brackets need not be faced with any consequential tax increases.
There are billions in corporate tax loopholes that can be eliminated to go toward health care costs for those least able to afford increases in their premiums. Ryan’s plan does call for tax reform to eliminate most loopholes (he has yet to outline which will and won’t be eliminated) while creating a lower corporate tax rate of 25% from its current 35% level. But this still doesn’t help poor seniors, families with children and the disabled. It also doesn’t guarantee that health insurers will take those lower tax rates and put them back into lower premium costs.
One thing all sides can agree on is that there are areas where costs can be controlled by insurers and policy holders alike. Preventive practices that reduce health threats should be encouraged to keep costs down. Diet and exercise should be pushed at all levels to reduce the risk of heart disease and diabetes. Michelle Obama’s efforts to reduce childhood obesity is aimed at curbing this serious health threat to future generations yet some on the right berate it to score political points. Sarah Palin’s attack late last year referred to the Let’s Move! program as a “kick” of Michelle Obama’s and falsely claimed the First Lady was attempting to restrict parental “decisions for their own children, for their own families in what [they] should eat.”
One measure that could help reduce overall costs and was implemented in the health care reform bill passed last year – which Ryan and his Party want to repeal – is to streamline the way patient records are handled by promoting the use of electronic medical records (EMR); a system that would efficiently share information and reduce overhead costs. Decreasing unwarranted variation in medical practice and unnecessary care is another way to keep costs down. “Some experts estimate that up to 30% of health care is unnecessary, emphasizing the need to streamline the health system and eliminate this needless spending.”
These and other options are available to help lower health care costs in conjunction with creating revenue in those areas where highly profitable companies and wealthy individuals can contribute. These approaches and cutting Defense spending go missing in Ryan’s plan to reduce the budget deficit. Ryan and the GOP are misleading voters if they continue to insist that others are guilty of “demagoguery and distortion”.
- I’m Willing to Take Paul Ryan and the GOP’s “Path to Prosperity” Budget Plan Serious, IF … (woodgatesview.wordpress.com)
- CEPR: Cost of Medicare Equivalent Insurance Skyrockets under Ryan Plan (yubanet.com)