Congressman Paul Ryan of Wisconsin has given a lot of thought to the future of Medicare and how this program, which takes up 13% of the federal budget, should be shaped in the future.  Ryan is one of the Republican “Young Guns” who will take leadership roles on key committees if their party becomes the majority in the House of Representatives.

An article in Kaiser Health News provided an overview of Congressman Ryan’s proposal for Medicare:

Current Medicare beneficiaries, and those nearing retirement (55 and older), would get Medicare as it exists today. For everyone else, eligibility would begin at 69 and a half, and there would be a “standard Medicare payment” for the purchase of private health coverage.

At the beginning, Medicare vouchers would cover $11,000 of the cost of a health plan, which the proposal lists as the average amount of money that Medicare currently spends on a beneficiary. The total would increase with inflation, based on a combination of the consumer price index and its medical care component. If the payment exceeds the cost of a plan, the beneficiary could invest the leftover money in a medical savings account to pay for other medical needs, or buy long-term care insurance.

Government payments would vary depending on an individual’s income, health status, and initially region. Individuals with incomes less than $80,000 would receive the full amount, those between $80,000 and $200,000 would get half, and those above $200,000 would receive 30 percent. The government also would fully fund medical savings accounts for low-income beneficiaries.

Ryan is the top Republican on the House Budget Committee and a senior member of the Ways and Means committee which has jurisdiction over Medicare and Social Security.  He could become the chairman of the committee that oversees Medicare.

From my perspective (as I’m over 55), Ryan’s plan has some interesting ideas.  But unless the under-65 insurance market changes – and Republicans say they will repeal the recent health insurance changes  – the idea of raising the Medicare eligibility age to 69 is …frightening.

The idea of the government giving people money to buy their health insurance sounds interesting to me.  But the problem is that insurance companies will be making a profit from that money.  Why not get rid of health insurance for-profit and save the U.S government billions of dollars?  Other countries like Germany, France, and Switzerland have health insurance companies – but those companies are “not-for-profit”.  Medicare is a not-for-profit insurance organization. Its overhead costs are 2%.  Insurance company overhead costs are 15-20% and include profits.  What is the better deal for American taxpayers?  2% vs 20%:  I think the answer is obvious.

The Secretary of Health and Human Services,Kathleen Sebelius, is not taking the blame for health insurance premium increases – and she’s warning insurance companies to stop lying about why they are raising premiums. Sebelius wrote a letter to the America’s Health Insurance Plans (AHIP) to inform them that insurance company lies and misrepresentations will not be tolerated.

Here the Sebelius letter to AHIP President Karen Ignani:

It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for
2011 on the patient protections in the Affordable Care Act.  I urge you to inform your members that there will be zero tolerance for this type
of misinformation and unjustified rate increases.

The Affordable Care Act includes a number of provisions to provide Americans with access to health coverage that will be there when they
need it.  These provisions were fully supported by AHIP and its member companies.  Many of the legislation’s key protections take effect for
plan or policy years beginning on or after September 23, 2010.  All plans must comply with provisions such as no lifetime limits, no
rescissions except in cases of fraud or intentional misrepresentation of material fact, and coverage of most adult children up to age 26.  New
plans must comply with additional provisions, such as coverage of preventive services with no cost sharing, access to OB / GYNs without
referrals, restrictions on annual limits on coverage, a prohibition on pre-existing condition exclusions of children (which applies to all
group health plans), access to out-of-network emergency room services, and a strengthened appeals process.  And health plans that cover early
retirees could qualify for reinsurance to sustain that coverage for businesses, workers, and retirees alike.

According to our analysis and those of some industry and academic experts, any potential premium impact from the new consumer protections
and increased quality provisions under the Affordable Care Act will be minimal.  We estimate that that the effect will be no more than one to
two percent.  This is consistent with estimates from the Urban Institute (1 to 2 percent) and Mercer consultants (2.3 percent) as well as some
insurers’ estimates.  Pennsylvania’s Highmark, for example, estimates the effect of the legislation on premiums from 1.14 to 2 percent.
Moreover, the trends in health costs, independent of the legislation, have slowed.  Employers’ premiums for family coverage increased by only
3 percent in 2010 – a significant drop from previous years.

Any premium increases will be moderated by out-of-pocket savings resulting from the law.  These savings include a reduction in the
“hidden tax” on insured Americans that subsidizes care for the uninsured.  By making sure insurance covers people who are most at risk,
there will be less uncompensated care, and, as a result, the amount of cost shifting to those who have coverage today will be reduced by up to
$1 billion in 2013.  By making sure that high-risk individuals have insurance and emphasizing health care that prevents illnesses from
becoming serious, long-term health problems, the law will also reduce the cost of avoidable hospitalizations.  Prioritizing prevention without
cost sharing could also result in significant savings: from lowering people’s out-of-pocket spending to lowering costs due to conditions like
obesity, and to increasing worker productivity – today, increased sickness and lack of coverage security reduce economic output by $260
billion per year.

Given the importance of the new protections and the facts about their impact on costs, I ask for your help in stopping misinformation and
scare tactics about the Affordable Care Act.  Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with
states, will not tolerate unjustified rate hikes in the name of consumer protections.

Already, my Department has provided 46 states with resources to strengthen the review and transparency of proposed premiums.  Later this
fall, we will issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health
insurers, with the justification for increases posted publicly for consumers and employers.  We will also keep track of insurers with a
record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014.  Simply stated, we will not stand
idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.

Americans want affordable and reliable health insurance, and it is our job to make it happen.  We worked hard to change the system to help
consumers.  It is my hope we can work together to stop misinformation and misleading marketing from the start.

Sincerely,
Kathleen Sebelius

From the IRS web page :

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.

Medicare Part D Coverage Gap “donut hole” Rebate

The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at www.medicare.gov.  

 Small Business Health Care Tax Credit

This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.

Employer-Provided Health Coverage — Not Taxable

Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee’s annual Form W-2. This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income and it is not taxable.

Health Coverage for Older Children

Health coverage for an employee’s children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.