Medicare provides health insurance to about 45 million seniors and disabled Americans. This is an expensive population to cover, and taxpayers pick up the vast majority of the cost.
Any proposal to rein in government spending results in heated, partisan debates. Now a plan released by Sen Ron Wyden, D-Ore., and Rep. Paul Ryan, R-Wis., is being celebrated by some as bipartisan success.
Actually, it is proof that even a Democrat and Republican working together can chart a dangerous course for future retirees.
The centerpiece of the lawmakers’ approach is the creation of a “premium support” system. Seniors would be allocated a set amount of money to buy health insurance. They could use it to pay for the traditional, government-run Medicare that has been around for decades. Or they could spend it on approved private-sector insurance plans.
The two lawmakers argue such private competition will drive down costs. If you think that sounds familiar, it’s because you’ve heard it before. What Wyden and Ryan want people to forget: It hasn’t worked. Private plans in Medicare have been financial failures.
In the 1990s, the government paid private insurers to cover seniors in “Medicare+Choice” plans. They didn’t save taxpayers money. Instead, insurers demanded more and more money from Uncle Sam. Eventually they stopped offering plans and seniors returned to traditional Medicare.
Then in 2003, a Republican-controlled Congress went to bat for private insurers again. Three years later, the resulting Medicare Advantage plans made $1.3 billion more in profits than they had expected to make, according to the Government Accountability Office. Lucky them. The unlucky American taxpayers pay at least 12 percent more for that program than they pay to cover seniors in traditional Medicare.
Wyden and Ryan certainly know all this. But they are gunning for more of the same.
Under their plan, the government would provide only a set amount of money to cover the cost of premiums. Yes, that caps the expense to taxpayers. The two lawmakers say seniors would not be stuck paying more because the private sector is going to do such a good job controlling costs.
That’s the same private sector that has not done such a good job of controlling costs in the past. It’s the same private sector that pays huge executive salaries, spends millions of dollars on new office buildings and is beholden to stockholders.
But if the private sector fails again, Wyden and Ryan have a backup plan: Congress would step in and “reduce payments to providers, drug companies or others who may be responsible for the escalating costs,” they wrote in the Wall Street Journal.
Of course, Congress can do that without further privatizing Medicare. In fact, there is a lot Congress can do to make Medicare more solvent without further privatizing it. First, Republican lawmakers can stop pushing to repeal the health reform law, which creates a panel to stem the growth of Medicare.
If Congress wants to be more proactive, it can lift the statutory cap that limits what seniors contribute toward their insurance. The law protects them from having to cover more than 25 percent of the cost of Medicare Part B, which covers doctors’ visits and Part D, which covers drugs. If seniors paid more, taxpayers would pay less.
Congress can cut Medicare Advantage plans entirely, which would save taxpayers the 12 percent higher cost we pay for Advantage plans copared with traditional Medicare.
And the government could administer its own drug benefit.
It can increase Medicare payroll taxes that fund Part A, which covers hospital visits. The 1.45 percent workers and employers pay has remained unchanged since 1986.
Even as the cost of health care has grown, Congress has refused to increase this source of revenue. Instead they complain about the program running out of money.
Or worse, they propose increasing the involvement of the private sector, which has been tried and failed.
Copyright The Des Moines Register. Reprinted with permission.