Ryan's mythical Medicare "Reform" by The Economist

[L.Wood]

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(As he has done on previous occasions Ryan likes to play thimble n' pea game about his proposals. Assuming certain conditions will remain constant is one of his
usual budget tricks which he will never reveal.)

The CBO scores Paul Ryan
Apr 6th 2011, 1:19 by G.I. | WASHINGTON
The Economist

THE federal government has been described as a gigantic insurance company with a side business in security. Its largest fiscal obligations, outside of defence, involve protecting Americans from various risks: unemployment, destitution, illness and lack of education. Paul Ryan’s budget is, ultimately, an alternative to that vision—one in which the federal government would shift many of those risks to the states or to Americans themselves.

That is what emerges, in its own antiseptic way, from the Congressional Budget Office’s analysis of Mr Ryan’s proposal.
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Since the proposal is most specific and sweeping on health care, that’s what the CBO dwells on. Starting in 2022, Medicare beneficiaries would receive a voucher to pay for private insurance. In the first year of the plan, a beneficiary would pay 61 cents for services that he would have paid 27 cents for under traditional Medicare, while the government contribution is unchanged: 39 cents. Why are they, in combination, paying more for the same services? Because private plans cost more than traditional Medicare. Thereafter, the value of the voucher grows more slowly than health care costs so by 2030 the government is paying just 32 cents while the beneficiary is paying 68 cents for that same set of services.

The federal government, instead of matching the states in paying for Medicaid, would, starting in 2013, switch to block grants that grow in line with population and overall (not health care) inflation. Federal Medicaid spending would be 32% lower in 2022 and 49% lower in 2030 than currently projected. ....
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These cuts have the intended effect. Federal spending on health care is dramatically lower than it otherwise would be. Total federal spending drops to 20.25% of GDP in 2022 and 14.75% by 2050. The budget swings from a deficit of 2% in 2022 to a surplus of 4.25% in 2050. The federal debt declines instead of soaring. The catastrophic consequences of unrestrained entitlement spending are avoided.

However, a huge asterisk must be appended to these figures: much of the CBO’s estimates of revenue and spending are not the result of evaluating particular policies.

Mr Ryan’s staff simply instructed the CBO to assume revenues remain at 19% of GDP. “There were no specifications of particular revenue provisions that would generate that path”, it says. This can be risky. When the CBO analysed Mr Ryan’s Roadmap for America’s Future, it accepted Mr Ryan’s instructions that revenues would rise to 19% of GDP. When the Tax Policy Center analysed the specifics of the Roadmap, it concluded that tax revenue would fall below 17% of GDP. It also concluded that its benefits would accrue overwhelmingly to the most affluent 20% of American families, mostly because Mr Ryan exempted capital gains and dividends from taxation. By contrast, the Bowles-Simpson plan does not, and thus its tax proposal is mildly progressive.

Entire ECONOMIST article is here .

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[L.Wood]

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Eliminate Private Medicare Advantage Plan Subsidies

The Medicare Modernization Act of 2003 includes numerous provisions encouraging the continued privatization of the Medicare program. Among these are billions of dollars in subsidies to private health plans intended to encourage their participation in Medicare. Overpaying private companies to provide services that could readily be provided by traditional Medicare at less cost undermines the Medicare program and increases Part B premiums for all beneficiaries as well as increasing costs to the federal government. The National Committee to Preserve Social Security and Medicare believes these subsidies should be eliminated, and the savings dedicated to the preservation and expansion of traditional Medicare.

Overview

Private health plans, now called Medicare Advantage plans, were first allowed to participate in Medicare because some policymakers believed they could provide better services at a lower cost than traditional Medicare. In fact, because it was anticipated private plans would be so efficient, the government initially paid them five percent less for each beneficiary they enrolled than it would have cost to cover that same beneficiary in traditional Medicare.

In 25 years time, the powerful health insurance industry lobby has been extremely successful in turning this rationalization on its head. Instead of paying private plans less to reflect the efficiencies they argued would save the government money, Medicare now pays them significantly more than it would cost to cover the same beneficiaries through traditional fee-for-service Medicare. Rest of column is here

Guess who voted for and helped pass The Medicare Modernization Act? Ryan, Boehner, McConnel and Bush. That's the same group who's calling for an end to Medicare. It' also happens to be a group who voted SEVEN times to raise the debt ceiling under G.W. Bush.

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