When you see a politician on television, do you want to talk back to him? This is my “talkback” to Mitt Romney’s presentation on Medicare:
Posts Tagged ‘paul ryan medicare’
Yesterday, Mitt Romney did his white board presentation comparing President Obama’s plans for Medicare to his own. Romney painted a bleak picture of Medicare under Obama, and offered his own vision for the program that provides health insurance to 48 million Americans. Romney said his plan for Medicare would be “very much like what we have today with Medicare Advantage”.
Currently, nearly 30% of Medicare beneficiaries are enrolled in Medicare Advantage plans across the country. Medicare Advantage enrollment is around 50% in cities such as Phoenix, Tucson, Philadelphia, Buffalo, and Miami (and many more).
Medicare Advantage plans receive a base payment of around $800 per month from Medicare for each person enrolled with them. In Florida, plans get $1,100 per person per month. With this “premium” paid by Medicare, Advantage plans pay the medical bills for their members.
People enrolled in Medicare Advantage plans have co-pays for every medical service they receive, and this is very similar to the kind of health insurance they had through their employers (if they worked for a large employer and had good coverage). If people are healthy, they will have very low out-of-pocket costs in a given year. If they get sick, their out-of-pocket costs are currently capped at $6,700 per year (or lower depending on their plan).
I think Medicare Advantage could be a good business model for Medicare except for a few things:
Capping Medicare costs: Payments to Advantage plans are risk adjusted, so Medicare pays more for people who are sicker and more costly for the plans. Medicare’s payout is not capped under the current system. Ryan and Romney would cap what Medicare pays for each person’s coverage, so the risk would shift from Medicare to insurance companies. Why would insurance companies take on this risk? I suppose they would raise their premiums each year to make sure they make a profit. But if Medicare “vouchers” do not increase enough, will seniors have to pay the difference? What if they can’t pay the higher premium each year?
Competition is costly: Ryan and Romney say competition among Advantage plans will keep costs down, but competition requires advertising and big salaries for management. Today’s Advantage plans have administrative costs (including profit) of around 15% of their total revenue. Original Medicare, which doesn’t do much advertising and doesn’t pay million dollar salaries, has administrative costs of around 4-5% of its budget.
Profits: Advantage plans get to make a profit from doing business with Medicare. If Advantage plans have a 5% profit margin, let’s do the math. Medicare spent $486 billion in 2011. $486 billion x .05% = over $24 billion. That’s profit going to insurance companies rather than staying in the Medicare Trust Fund.
Questions for Mitt:
I’d like to ask Mitt Romney how he can justify $24 billion every year going to insurance company profits under his version of Medicare.
Mitt also pointed out in his whiteboard presentation that Obamacare payment cuts to Medicare Advantage plans will cause insurance companies to cancel plans around the country. He said four million people will lose their Advantage plan under Obama.
I’d like to ask Mitt Romney if he thinks it’s okay for Medicare to spend more money on seniors in Medicare Advantage plans than those on Original Medicare. If Advantage plans are not saving Medicare money, is that a good deal for Medicare? And if it’s not a cost-saving model now, how will it be under his version of the program?
Health care expenditures would double for the elderly in every state by 2022 if the Republican plan for Medicare is implemented. This is the finding of a detailed analysis of the Ryan plan for turning Medicare into a voucher program where the government’s cost would be fixed, leaving seniors to cover more of their health care costs.
According to the report by the US Congress Joint Economic Committee, if Medicare remains as is, Seniors in Arizona can expect to pay, on average, $5,364 out-of-pocket for their health care costs in 2022. Under the Ryan voucher version of Medicare, seniors in Arizona can expect to pay out $10,906 in 2022.
Analysis of the Ryan plan compared to traditional Medicare was carried out by the US Congress Joint Economic Committee. The report provides a state-by-state analysis of the Republican proposal’s impact on the health care costs of the typical 65-year-old in 2022. The report finds that the Republican plan for Medicare will double the out-of-pocket health care expenses of the elderly in every state, with some paying over $7,000 more than what they would have paid under traditional Medicare.
Excerpts from the committee report:
Under the Republican plan, Medicare will no longer function as a health insurance provider. Instead, Medicare beneficiaries will only receive a payment that they could use to purchase private health insurance. Medicare beneficiaries will bear the full brunt of all remaining health care expenses not covered by their insurance provider. Moreover, the Republican plan reopens the “donut hole,” which is the gap in Medicare Part D that had forced beneficiaries to pay 100 percent of their drug costs after they exceeded an initial coverage limit and until they qualified for catastrophic coverage. As a consequence, millions of older Americans will pay higher prescription drug costs.
Medicare is a lifeline for older Americans. The Republican Medicare plan will force millions of elderly Americans to pay more for medical care and could accelerate the rise in health care costs. More ominously, the Republican plan steers Medicare away from the goal the program has aspired to achieve for nearly five decades, which is to provide older Americans with universal access to high‐quality, affordable health insurance in their retirement years.