Attention late-40-somethings and early-50-somethings: Medicare as your parents knew it is about to be gutted no matter who wins the White House in 2012. You may not like it, but you might have to accept it.
Toss out all the partisan rhetoric and appalling similarities become clear in the policy prescriptions coming from President Obama and all of the leading Republican candidates and their minions. All of the following are in both the Democrat and Republican plans:
- Limit the overall growth of Medicare spending
- Reduce monthly Medicare payments
- Squeeze more money from upper-income retirees and some in the middle-class
- Raise the eligibility age
- Increase the number of ineligibility restrictions and disqualifying conditions
With more than 1.5 million baby boomers within a year of becoming eligible for Medicare, the program’s future is one of the most important economic issues for anyone now 50 or older. Health care costs are the most unpredictable part of retirement, and Medicare remains an exceptional deal for retirees, who can reap benefits from decades of payroll taxes they paid – mandatorily – throughout their lives.
Two sets of numbers underscore that point.
- Medicare’s giant trust fund for inpatient care is projected to run out of money in 2024. At that point, the program will collect only enough payroll taxes to pay 90 percent of benefits.
- Researchers estimate that 20-to-30 percent of the more than $500 billion that Medicare now spends annually is wasted on treatments and procedures of little or no benefit to patients, and on fees charged by medical professionals for tests or procedures that are completely unnecessary.
Taken together, that means policymakers can’t let Medicare keep running on autopilot and they’ll look for places to slash before going after any payroll tax increases.
Privatization is the biggest divide between Democrats and Republicans.
Currently about 75 percent of Medicare recipients are in the traditional government-run, fee-for-service program and 25 percent are in private insurance plans known as Medicare Advantage.
Paul Ryan’s original and justifiably much-maligned approach – which was part of a budget plan House Republicans unanimously passed in the spring – would have put 100 percent of future retirees into vastly more expensive private insurance. More than two-thirds of Congressional Republicans, and about one-eighth of Congressional Democrats, still support that plan.
People over age 55 would get a fixed payment (the amount would be determined by an appointed Congressional committee) that they could use for private health insurance or traditional Medicare. Proponents call it a “premium support voucher.” The problem is, the amount of that voucher – as proposed – will only cover about 62 percent of the already known medical insurance costs that have been projected through the year 2025.
Under both of Ryan’s versions, people now 55 or older would not have to make any changes. GOP presidential candidates Mitt Romney, Michele Bachmann and Newt Gingrich all praise his latest plan, calling it “a marvelous restructuring.” Isn’t it amazing how many ideas that are instantly recognized by the general thinking public as horrible are considered “marvelous” by the people who won’t be subject to those ideas?
And, of course, *NOBODY* wants to talk about how either plan would be paid for. Nobody wants to go on-record and say – flat-out – that neither plan will save taxpayers one single dime. And neither side wants to mention that their plan includes a proposal that completely eliminates traditional Medicare within 10 years through an annual age-based phase out.
“Nobody has presented a formula on this that makes people comfortable,” said health economist Marilyn Moon, who formerly served as a trustee helping to oversee Medicare finances.
White House spokesman Jay Carney says Ryan’s plan “would end Medicare as we know it for millions of seniors, causing the traditional Medicare program to wither on the vine.” But what administration officials won’t say is that health care law Obama signed already puts in place one of Ryan’s main goals by strangling any future increases in Medicare spending. The Medicare cost ceiling flatlines … just like most of the patients who’ll be forced to use it.
During failed budget negotiations with Republicans last summer, Obama indicated a willingness to make more major changes to Medicare, including gradually raising the age of eligibility to 67, increasing premiums for most beneficiaries (who make less than $237,000 a year), increasing co-payments and deductibles (i.e., you pay more out of your pocket), and cutting payments to drug-makers and other providers.
Democrats are still hoping to use Ryan’s privatization plans as a political weapon against Republicans in 2012, but the Medicare debate will cut both ways. For the 76 million baby boomers signing up over the next couple of decades, it will pay to be watching. And you’ll pay through the nose if you don’t.