One Expert Says Seniors Would Lose with Ryan’s Medicare Plan

One Expert Says Seniors Would Lose with Ryan’s Medicare Plan

But he concedes we’ll all pay more to keep Medicare solvent

Reuters/The Fiscal Times

The Republicans’ pledge to dismantle and eventually replace the Affordable Care Act has been getting considerable attention in the wake of President-elect Donald Trump’s victory over Hillary Clinton. But once the new GOP-controlled Congress takes action in January, there could be plenty more fireworks when Republican leaders turn their attention to Medicare, the popular but pricey health care program serving 57 million seniors.

Medicare, created in the mid-1960s to guarantee health care coverage for seniors and retirees, is a complex system that includes Part A for hospital insurance, Part B for doctor and medical insurance, private plans called Medicare Advantage, and the Part D subsidized prescription drug plan. The government spent a total of $648 billion on Medicare in 2015. And while the Medicare trust funds are relatively solvent for the time being, Medicare Part A which is dependent on payroll taxes will be “depleted” by 2028 unless the government intervenes, according to a trustees’ report.

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House Speaker Paul Ryan (R-WI) claims that the system is going “broke” and is leading a renewed charge to overhaul Medicare as part of a larger GOP strategy to slow the rate of growth of entitlement programs and avert major debt problems down the line. He calls his plan, unveiled in June, “A Better Way.” Key elements include raising the age of eligibility from 65 to 67; merging Medicare Part A and B, including the premiums and deductibles; and gradually privatizing the system with government-issued vouchers or “premium supports” to defray the cost of insurance policies purchased by seniors on the open market.

“Medicare . . . by many measures has served seniors successfully since the 1960s by providing access to health care for millions and contributing to longer life expectancies,” Ryan wrote. “Despite these successes, the program faces notable challenges, including a complex financial structure and projected spending growth that make the program unsustainable for the long term.”

But his plan has already begun to draw sharp opposition from an array of groups and critics, including AARP and other seniors’ advocacy organizations, labor unions, veterans, liberal think tanks and policy experts.

Philip Moeller, an award-winning business journalist, author and expert on aging, health and retirement, is among the vocal critics of Ryan’s approach. Moeller is the author of the forthcoming book, Get What’s Yours for Medicare: Maximizing Your Coverage; Minimizing Your Cost (Simon & Schuster). He also is a research fellow at the Center on Aging & Work at Boston College.

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In an interview with The Fiscal Times on Tuesday, Moeller argued that while the half-century old Medicare program clearly is in need of some tweaking and reforms to maximize the quality of medical treatment while slowing the long-term growth in government costs, he rejects the Ryan approach as too draconian. Moeller contends that the average American would be “less well-off over time” and that the plan would be “relatively disadvantageous” for lower-income seniors.

The following is a partial transcript of the interview:

Q.  Paul Ryan and other Republicans plan to push for major reforms of Medicare next year. From your perspective, is Medicare in need of reform of the coverage it provides and the way it’s financed?

A. Major reform? No. I don’t see that. I do see that Medicare is such a large program that there will always be room for improvements. But in terms of let’s say a basic redo of the sort of rationale of how Medicare is offered and the role of private insurers in Medicare, I don’t see that as being needed.”

Q. Why is that? And what are the programs biggest plusses?

A. Well, by and large, Medicare works. It provides what could be a superior level of health care to tens of millions of Americans. It has been doing this for decades. There is always room for improvement and Medicare – in fact, all of health care faces some challenges that we can talk about. I don’t think that the challenges that seem important to me are the ones directly addressed in the proposals from Speaker Ryan. If you want to give the private sector a greater role in Medicare, which seems to be one of the objectives of the plan, well, this is already happening. Medicare Advantage plans now have a third of the market.  

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Q. But what about the need to address the growing overall government cost?

A.  I wouldn’t disagree with that, but I think there are a lot of different ways to attack it other than to create a substantially new way of handling Medicare.

Q. What do you see as Medicare’s biggest downside, its biggest minus?

A. I think the biggest minus of Medicare is that it is so complicated. And I view these programs not so much from a matter of public policy as from the standpoint of how beneficiaries try to use them. That is sort of a consistent theme of how I look at Medicare.  There are too many different insurance plans for people to choose from. Too much choice is a bad thing.

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And given what we spend on health care in this country, the amount of money we spend communicating these programs to their intended beneficiaries is not even a little piece of a decimal point. We need to spend a lot more money communicating what we’re doing rather than seemingly devoting our efforts to new and better versions of the program.

Q. Ryan claims the system is going ‘broke,’ something that others take issue with. Is it going broke?

A. There is more than one financial issue here. His narrow argument that somehow the Affordable Care Act is somehow bankrupting Medicare is not true. The Affordable Care Act increased Medicare premiums substantially for high-income individuals. All of that money went right back into Part A of Medicare [for hospital coverage]. That act actually extended the financial life of the Part A trust fund. But healthcare price trends continue to be projected at above general economic growth. So we’re going to be paying relatively more for our health care and Medicare is going to use a lot more health care because it has a bigger constituency.

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Those realities do create substantial funding pressures for Medicare but they do for all of health care. So to that extent, yeah, I think Medicare faces some long-term challenges. The area that I would hope we can get some bipartisan agreement on is to more intelligently and quickly move from our current fee for service Medicare to what I call fee for performance medicine [which is something Congress and the Obama administration have agreed to gradually implement].

I think the Ryan approach can certainly achieve that objective. But I think it does so in some really negative ways that are relatively disadvantageous to lower income Americans.

Q. You mentioned the complexity of the Medicare system – Part A, Part B, Medicare Advantage, Part D prescription drugs, etc. Do you think the system needs to be streamlined or consolidated or is it working pretty well?

A. I think it needs to be presented to beneficiaries in a simpler, clearer way. That doesn’t necessarily mean that the system needs to be streamlined, but the way we talk about it and the products that this system produces need to be simplified.

Q. Ryan calls his proposals for revamping Medicare a “Better Way.” Do you think it’s a better way than the current system?

A. No. It’s a different way. But there were [several] things  that really jumped out at me, in terms of how they work. For example, he wants to combine Parts A and B into a unified program. I actually think I wouldn’t mind that. I think that could be a needed simplification. But I think raising the retirement age of Medicare so that it’s consistent with Social Security is something that is deceptively sort of beguiling but in practice is really difficult and unfair to do. I’ve studied Social Security as well as Medicare, and the reality is that many Americans can’t wait until Social Security’s full retirement age in order to take benefits because their bodies wear out. They have very difficult jobs and these are the same people who probably can’t wait until 67 to take Medicare.

Q. What about the Ryan proposal that is getting so much attention – premium support to encourage more people to go into private plans?

A. Premium support to me is just another word for enforced savings. It’s a way of capping the government’s spending in these programs. It’s not necessarily to me associated with any kind of improvement in the delivery of health care. It’s simply a cost structure to contain what we pay for health care. I think other proposals that would transfer some of this authority to the states likewise sound very good but in essence, they are enforced savings programs [for the government] that don’t get at the root cause of why health care is expensive but just try to cap the expense.

Q. So how would the voucher system work?

A. Sorry, it’s not a voucher system.  Speaker Ryan says it’s not a voucher system, it’s a ‘premium support.’

Q. So the beneficiaries choose from among a number of private plans authorized by the government and the government makes direct subsidy payments to the insurers to help cover part of the premiums, is that right?

A. That’s my understanding. I don’t purport to know how all the details are going to work out. And one of the real questions I have is: Medicare is a very heavily regulated program. I might like to have fewer regulations, but I can’t see how we can have what in effect was government-run healthcare that is not a heavily regulated program. Because in effect, Medicare is taking the role of the private market and has for more than 50 years.

So I don’t know how you can substantially deregulate Medicare. That’s going to be a really challenging aspect if in fact, Republicans are consistent in saying one of their main goals is to basically deregulate in order to permit people to have more choice and to allow health care providers to be more innovative in how they want to offer health care services.

Q. What percentage of seniors’ health care costs are covered by Medicare and how much are the beneficiaries on the hook for? And how would that compare with Ryan’s plan?

A. I would be hesitant to talk about percentages [because it varies between Medicare programs]. The one thing I will say is that it seems pretty clear that whatever we pay for healthcare now, in Medicare we’re going to pay more in the future. More of the burden of Medicare is going to fall to the beneficiary because, regardless of which party is in power, I don’t see how we can continue to afford to spend as much money as the government as the trend lines from CBO [the Congressional Budget Office] indicate we’re going to be spending in the future.

What we’ve learned so far from Medicare, and it’s a pretty clear message: When people can’t afford their Medicare, they go without health care. Not only is that damaging to them individually, but it could end up in some cases raising our nation’s health care bill. Because if you don’t attend to an issue when it’s relatively treatable and it becomes a chronic condition, it’s much more expensive to treat down the road.

Q.  To get back to an earlier question, comparing the current system of Medicare with what Ryan is talking about, would beneficiaries absorb a bigger overall share of their health care costs under the Ryan plan?

A. I think they would have to. If you have a premium support system, to me that is a form of financial rationing of health care. I don’t know how else to put it. Otherwise, why would you need a premium support system? Why couldn’t you just continue with the premiums we pay for Part B and Part D and the other insurance products we get? Because those cost trends are viewed as unaffordable over time.

Q. So, bottom line, would the average American be better off or less well off with Ryan’s “Better Way” Medicare reform plan?

A. I think they would be less well-off over time. Having said that, we do need to figure out a way to get a handle on how we pay for healthcare in this country. It won’t do anybody any good if Medicare in effect becomes bankrupt – which wouldn’t happen quickly but could happen over the next 20 or 30 years. So while I think his plan would not make people better off, I think there is a lot of pressure on leaders in Congress to develop a plan that would head off where the financial lines are converging in a way that isn’t perhaps punitive on certain members of society.