The Future of Medicare: The Republican Plan
Monday, April 18th, 2011
As discussed in the last post, the two political parties have put forward entirely different proposals for the future of Medicare. Medicare is an essential program for seniors, including those with mesothelioma, which is nearly always is diagnosed in people over the age of 50. It’s also essential to younger adults whose parents have entered their Medicare years.
For this reason, we must cut through the spin and clearly understand what the two parties are claiming. Let’s look first at the arguments in favor of Republican plan, which was developed by Congressman Paul Ryan of Wisconsin.
Republicans object to charges they are abolishing Medicare. They say they are “reforming” Medicare. But the reform is drastic.
Right now, Medicare is a program in which the government reimburses health care providers for 70 percent of the medical costs for most Americans age 65 and over. Under the Republican plan, in 2020 Medicare would be converted to a program that partly reimburses private insurance companies that sell policies to seniors. It would still be called “Medicare,” but whether the new Medicare would be a “reformed” program or an entirely different program with the same name is a purely subjective judgment.
Republicans say this drastic overhaul is necessary. Several Republicans recently have claimed the Congressional Budget Office (CBO) says Medicare will be “broke” in nine years, so the program as it is won’t be around for anyone born after 1956. Their plan at least preserves something for those who turn 65 after 2020, they say.
Under the Ryan plan that was passed with the votes of all but four House Republicans (but no Democrats) last week, people currently on Medicare, and people aged 55 and over, will be in the program as it exists now. The change will affect Americans under the age of 55.
However, the CBO has never said the entire Medicare program will be broke in nine years. It is true that the CBO’s current Medicare Baseline projections say that the Hospital Insurance Fund, also called Medicare Part A, will be exhausted in 2020, but there are currently no projections that the rest of Medicare will go broke in the foreseeable future.
And the 2020 Day of Doom for Medicare Part A is not indusputed. Last year, the trustees of the Medicare Trust Fund projected that Medicare Part A should be able to pay its bills until 2029.
The Congressional Budget Office, while highly respected for its non-partisanship, has a long track record of being wrong in their Medicare projections. For example, years ago the CBO projected that total Medicare spending would rise to $60 billion in 1986. But actual Medicare spending in 1986 was only $48 billion. More recently, the CBO estimated that spending on the Medicare Part D drug benefit would be $206 billion, and the actual number was 40 percent less.
So, while CBO analyses are very useful, their projections for Medicare Part A are not a pronouncement of what will happen, but what might happen.
Some political analysts have pointed out that under the Republican plan, people under the age of 55 will still be expected to pay the FICA taxes that support Medicare, even though they won’t be getting the same deal from Medicare. If there were a reasonable expectation that “new” Medicare would pay for as much of their expenses as “old” Medicare that might not matter. But all analyses, including Republican ones, say that with the “new” Medicare seniors will have to spend more of their own money for health care, assuming they can get health care at all.
