Ryan-Rivlin Health Care Plan Unveiled

Many of the recent debt reduction plans—including, the fiscal commission's Co-Chairs' recent proposal, the Galston-MacGuineas plan, and the Debt Reduction Task Force plan have included the important idea that health care cannot continue to grow without constraints. Now, two members of the White House's fiscal commission have put forth an innovative proposal to fundamentally change public health care.

Congressman Paul Ryan (R-WI) and Alice Rivlin just unveiled a health care proposal that would substantively change federal payments for Medicare by instituting a voucher system for retirees entering the Medicare system after 2021. This would gradually change Medicare from its traditional "fee for service" approach into a system where senior citizens would purchase their own health insurance with these vouchers. The amount of the vouchers would be calculated based on the average cost of each Medicare enrollee in 2012 and permitted to grow at the annual rate of growth in GDP per capita plus one percentage point. The retirement age would also be increased by two months every year until it reaches age 67 by 2032.

The plan also has a cost-sharing mechanism that would start in 2013 and in future years would be indexed to growth in spending per beneficiary for Part A and B. The cost-sharing changes would establish a single $600 deductible for Parts A and B, impose a 20 percent coinsurance cost for Part A and B after satisfying the deductible, and establish a catastrophic cap after accruing more than $6,000 in cost sharing payments. For Medigap, the beneficiary would be subject to a $500 deductible, require the beneficiary to spend at least $2,750 before being subject to the catastrophic cap and would limit cost-sharing coverage between the deductible and a catastrophic cap to 50 percent of the Medicare cost-sharing requirement.

Medicaid would be turned into a block grant to the states. Block grant funding would grow with the currently projected Medicaid population and with GDP per capita plus one percentage point. Capping the growth of the vouchers and the block grant would lead to significant savings of what the federal government will spend on health care.

For people eligible for both Medicare and Medicaid, Medicaid would no longer receive Medicaid assistance for Medicare premiums but would instead receive money from a newly created federal savings account. This account would equal $6,600 in 2012 and would grow at the rate of GDP growth per capita plus one percentage point. Their proposal would also repeal the CLASS Act and strengthen malpractice laws.

The CBO analysis of the Ryan-Rivlin plan projects it would reduce budget deficits by $280 billion over 2011-2020 and would significantly lower federal health care expenditures after that. The largest piece of this savings comes from the Medicaid block grants by 2020. Even still, under this proposal, federal spending on Medicare and Medicaid will be about 7 percent of GDP in 2020 and 10 percent of GDP in 2050.

Provision 2011-2020 Deficit Changes ($ Billions)
Malpractice Reform $60
Repeal CLASS Program -$70
Modify Medicare Cost Sharing $110
Medicaid Block Grants $180
Total $280

 

In a piece in the New York Times, Ryan wrote that this proposal may be "tough medicine," but is critical to the future of the country and of Medicare, saying that its current path is unsustainable and could bankrupt our government. We completely agree.

I wholeheartedly agree.  This

I wholeheartedly agree.  This plan would transform Health insurance into something like high deductible catastrophe insurance.  When health insurance began (probably in the mid-1930's), it started out on the the wrong foot by covering from the first dollar of expense.  The error continued until today, and will be difficult but not impossible to correct.

 

John B. Massey jbm912@yahoo.com.

Health Care

Seems a heck of a lot simpler just to raise the medicare tax a small percentage. Buying from a private company with vouchers means part of your purchase of insurance goes to profit and overhead for each insurance company instead of buying health care coverage. Under present medicare there is no insurance company overhead of profit. Most people like the fee for service plan and the purpose of government should be to make life better for it's citizens, not worse. Same with social security. It only needs a few small tweeks to make it good way beyond 2037.

We cannot allow our

We cannot allow our government to raise the tax just a little.  The first thing that they would do is run around the world to find more illegals to bring into the program to garner more votes.

How much should a senior set aside for your plan?

You need a calculator that easily generates the number of how much a senior like me should set aside in an account to have all of the senior's cost for a given year in an account so they know what is their maximium payment is for them in a "bad year."  Obviously one could mutlpily this by 5 for a "bad run" like cancer which I just beat.  I think this will make the plan more real and understandable to seniors and help them understand if it is positive and how to manage their funds to be ready to be ill (always the big question).  I like the voucher aspect of the plan it is gives seniors some real push back and power against doctors, the government and the insurers on both costs and quality of care ...introduces some checks and balances.  Same needed on what is covered. Today you spend 100K to replace each of my knees but not 5k to get the fat off my body, get me access to training facilities like an athelete and someone to come in for a few hours and help me with life chores ...all that would make me much healthier at 10% of the cost and prevent future bad health for me.  But that is not what makes doctors, big pharma and medical device makers and hospitals money.  It's not 1850 anymore and a new kind of healthcare/medicine is needed and one that includes and pays for a much broader range of services and providers than traditional model> It is better to lipo fat off a 70 year old for a small amount of money (it's like cataract lens replacement) than to torture them for 3 to 5 years on weight reduction programs that won't work and are designed for 20 year olds and then pay for daibetes, joint replacements and so on as the wrong model of medicine and treament are being used for the 70 year old and those who traditionally make the money off the approved treaments are going to lose out: this is but one of hundreds of examples I could give you.

 

 

Finally!!

...its about time they focused on where most of our money goes not some polictical bs that accounts for .0000001% of spending.

Has anyone actually tried to BUY health insurance?

 I'm self employed and all I can say is that buying health insurance is a joke.  Asking a senior to "buy" insurance with a voucher sounds great.  All I can say is...try it.  Most people I know who have been forced to buy a private plan have either been denied or charged an exhorbitant amount. I was denied because I take wellbutrin for migraines.  My insurance person told me that anyone who takes wellbutrin is routinely denied.  Wow.  Americans over 65 don't stand a chance.  Personally, I'd rather pay higher taxes to guarantee coverage.  Call me a socialist ... 

It's like Part D

This would be similar to Part D in that Medicare eligible people would be guaranteed acceptance.  In Part D there are many policies available with different premiums, deductibles, co-pays and such.  All of these companies compete for a piece of this captive audience.  Competition leads to lower prices.  Win-win.

 

Troubleshooting the symptoms

This proposal doesn't address the root problem of all entitlements. I say get rid of them all and give everyone their money back.

What does this plan do to services vs the current plan

I see a lot of money shifting no words about service changes. Where does the plan show effect of this plan on ordinary citizens access to medical care in words they understand. Like medical savings accounts the plan assumes people have the extra money to pay for any medical problems.

Submitted by Anonymous on March 17, 2011 - 9:40am -- response

While I agree with you that some portion of this will go to line someone’s pockets with profits, I do not share your pessimistic outlook because of that.  The fundamental problems with current Government Programs are that there is nothing internally driving them to reinvent themselves.  Layers upon layers of rules and bureaucracy are built up externally from Congress trying to "tweak" the system here and there, but the fundamental assumption is that Congress can "tweak" everything right.  They can't and have the track record to prove it.  Inherent in the current system, there are no incentives for the receiver to consider what the costs are to get the most "bang for the buck" and because of this, the initial response is to check everything out and get the most comprehensive and also expensive testing and evaluation done at every turn. While that may actually increase life quality to some small degree, it is not a sustainable practice. If the costs reflect back to the one who benefits, in some cases they will spend the money when something is not there to find, thus wasting money just as they would under the current system, or they may not investigate something when there is something to find. The difference will be that the person choosing to do this will be doing just that: CHOOSING as they see best. They will not be wasting (in some cases – not all) money that they bear no direct burden fpr (even if only a nominal percentage of) since if they choose to spend that money, they are making a statement that they considered the costs, and in each specific case, don’t consider it a waste.

 

Take away anti-trust protections and make insurance have to play fair. Profits will be made by those who are nimble and creative, and the profits we will give them will be worth more than what we get wasting money on a system that is designed to be UNABLE to change as needed.

healthcare vouchers

vouchers are meant to subsidize the rich who want government subsidized service, without settling for the healthcare, or education of the masses.  As soon as we went to education vouchers, the right started gutting the public education system and sending their own kids to liily white private schools.  the same will happen to health care.  the poor masses will wind up being packed in dark dirty poorhouse wards.

Priorities

Yes, let's screw over poor people and people to keep paying for trillion+ in wars.  Oh, and let's cut NPR funding and education to save pennies relative to the cost of these wars.  People who buy into this crap are too stupid to realize that they're shooting themselves in the foot while the rich get richer.

Medical Insurance

With all those seniors to buy insurance, an Insurance Co-Op should be made vice all those insurance exec's getting extra money for doing much of nothing.

Insurance Co's could also save money by getting rid of the middle man, between the agents and co's, that receive huge amounts of commissions from Ins. co's for directing business to them.  A more effecient and cost effective way needs to be devised.

You all miss the real problem..it is CORRUPTION.

Let me give you real examples. In October, my wife and I got flu shots at Walmart. She does not have insurance so we paid $24.  I have Medicare so the US paid $32.  That is half again as much. A small amount in this case. But, how many people get flu shots at Walmart? How about at Walgreens and CVS? I'll bet it's the same. Now we are into the millions.

Last year I had a small growth on my hand, about the size of a pin head. I went to a dermatologist at the a public university school of medicine. He snipped it off and had it analyzed. It was a small cancer so 2 weeks later, I returned to have it frozen off. That bill was more than $2,200. I used to have these snipped off or frozen in my doctor's office.. no charge!

We DO NOT NEED more insurance programs. We need reasonable medical facilities. We don't need to be admitted to the emergency room and have a battery of expensive test when we have a fever. Indeed, some hospitals have out-patient that charge affordable fees.

And what happened to that promise that medical insurance would not go up? It did.

Simpler to raise Medicare tax?

One reader says it 'simpler to raise medicare tax - just a little..." because vouchers to buy insurance will cause us to pay for "overhead and profit". This is a simple view that appears sensible at first glance, but really doesn't hold water. It assumes that the huge federal bureaucracy standing  behind the whole Meidcare boondoggle (CMS) is an efficient and maybe even cost-free operation. My own analysis of the costs associated with federal meddling and administrative bungling demonstrate that the waste and abuse resulting from CMS involvement is significantly in excess of that "overhead and profit" that the reader is so worried about. Raising taxes to feed the inefficient, inept and wasteful bureaucracy will fundamentally achieve nothing but more waste and ineptness and inefficiency.

The other component of this is the fact that is currently ignored when looking at the problem. The increase in medical costs resulted, in a very large part, from precisely the creation of Medicare, the implementation of its policy to pay for billed services (without any significant audit in the befinning - a clear invitation for fraud and abuse),and the subsequent implementation of Medicaid. So it was the government itself that created the problem it is now looking for scapegoats for. Are there dishonest doctors and facilities out there? Of course! Florida alone has been the center for fraud scheemes in excess of a Billion dollars. And other states also have their problems. But those higher fees you see on your bill are AUTHORIZED AND APPROVED by Medicare. Walmart, Walgreens and the rest got paid what the US WANTED to pay. If you get paid $50, willingly, by a contractor, for a job you would have done for $40, you can't be blamed for "creating" higher costs. The contractor willingly raised the price of your service to $50. And this is what Medicare does constantly. That's why the naive reader who would like to "raise taxes just a little" doesn't really understand the problem. Medicare (through CMS) is bungling the administration of the program and is inept and ineffective in establishing controls - to the point that it negligently sets itself up for multi-million dollar fraud schemes that mysteriously, it is unable to detect until the amounts involved are astronomical. Makes you wonder what percentage of CMS bigwigs are on the "take". Wouldn't be the first time we caught a bureaucrat stealing.

Doctors

I'm not quite on Medicare yet, but I can remember when doctors drove Buicks and Oldsmobiles not Mercedes, Porsches and Ferraris, and they made house calls. The real answer to high cost medicine is reduced payments to reasonable levels to doctors and a single non-profit insurance payer. Anything else simply keeps lineing insurance company's and doctor's pockets at the tax payer's expense. If the Republicans were serious about limiting transfer payments (money taken from your pocket and given to someone else) they'd be all for a simple straight forward solution. The problem is it's their pockets that would have less money from the transfers, so it isn't going to happen.

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