The Ryan plan for Medicare is already in place

Does this sound like the Ryan plan for the future of Medicare?

The plan you join will provide all of your Hospital Insurance and Medical Insurance coverage. The plan may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most plans include  prescription drug coverage.

Medicare pays a fixed amount for your care every month to the companies offering these plans. These companies must follow rules set by Medicare. However, each plan can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for non‑emergency or non-urgent care).

Under this scenario the government (Medicare) provides a fixed amount toward the cost of the coverage you select, you pay the difference between that amount and the amount charged by the plan (a rare occurance).  You can select from a number of competing plans each year.  These plans offer different benefits, and different ways of providing health care.

Actually, the above summary is from the Medicare.gov website and describes the existing Medicare Advantage (private insurer) plans in which about 20% of current Medicare beneficiaries are now enrolled.

Here is how the Ryan plan is described in the press:

Under the Ryan plan, Medicare would switch to paying fixed amounts to private health insurers instead of directly to hospitals and doctors beginning in 2022. Any increases in payments would be linked to the consumer price index. Beneficiaries would bear any costs above what the program provides. But current Medicare beneficiaries would not be affected.

Not only are Medicare Advantage plan participants subject to fixed payments based on the traditional Medicare costs, but under the health care reform legislation, payments to these plans were cut thus shifting more cost to the enrolled beneficiaries.  In other words, the politicians did exactly what they rant against in the Ryan plan.  They limited the government payment to save money and transferred that cost to individuals in the form of lower benefits and higher premiums.  [Note: Before the PPACA cuts, MA plans receive about 113% of the cost of traditional Medicare under a complex risk adjusted methodology including Congressional mandates.  However, beneficiaries receive higher benefits, including prescription coverage, and avoid the need for supplemental coverage which benefits many lower-income people.]

Granted a big difference in the Ryan plan is that payments by the government would be linked to the CPI, but if you don’t link payments to something other than self driving health care inflation, how do you control costs?   The fact is that you can manage costs in a transparent way or you can cut benefits and deny payment for services which is far less transparent.  The very reason many politicians oppose the Ryan plan (like the following from Sen Scott Brown) is the reason it makes logical sense and why MA operates the same way.  If you give a blank check to anyone, do you expect them to write a check for the same amount each year?

First, I fear that as health inflation rises, the cost of private plans will outgrow the government premium support— and the elderly will be forced to pay ever higher deductibles and co-pays. Protecting those who have been counting on the current system their entire adult lives should be the key principle of reform.

 Will the cost of Medicare Advantage plans outgrow the government premium support?

For those among us who fear turning Medicare into a private insurance program there is an alternative.  Just increase the governments per person cost each year by no more than the CPI and allow beneficiaries to use an alternative plan using the same amount.  What’s that you say, it’s just like the Ryan plan only with Medicare as it is today.  You bet it is, but isn’t the point to manage costs?

The next time you hear a politician or anyone rant and rave about the destruction of Medicare under a Ryan type plan, ask them about Medicare Advantage plans or better still ask someone who is enrolled in a MA plan.  You might also ask a physician.  Physicians are sometimes critical of MA plans because they scrutinize claims far more than traditional Medicare, imagine that.

Already politicians are positioning their positions not toward solving any problem, but toward their next election bid.

Related articles

• Why I don’t support Ryan’s Medicare plan (politico.com)