This morning, Rep. Jim McDermott (D-WA) asked Health and Human Services Secretary Kathleen Sebelius what would happen to seniors if Congress adopted Rep. Paul Ryan’s (R-WI) Roadmap proposal, which privatizes Medicare for incoming seniors. Under Ryan’s plan, new Medicare enrollees would receive an annual voucher they could use to purchase health insurance beginning in 2021. The voucher would initially be worth an average of $5,900 (in 2010 dollars) and increase to an average of $11,000 in 2010 dollars once all age-groups are phased in.
Sebelius rejected the plan, arguing that the government was responsible for ensuring the longevity of the Medicare program and that seniors who try to purchase individual coverage with vouchers would have limited leverage against large insurers. People in the individual market “are often penalized,” she said. “They pay 18 to 20 percent more than those who are in large employer pools. One of the reason for the health exchanges is to help pull people into pools so they have some purchasing power.” Sebelius also speculated she could not imagine her 90 year old father self-purchasing insurance. Watch it:
Yesterday, my colleagues Karen Davenport and Isabel Perera released a new report arguing that Ryan’s voucher system would also force seniors to pay more for care, since the plan saves money by offering a voucher that does not keep up with health care costs:
Under current law, people with Medicare coverage can expect to pay $2,730 per year ($228 a month) in 2021 for total Part B and Part D premiums, which will provide them with full Medicare benefits. Under Rep. Ryan’s proposal, new Medicare enrollees will pay an average of $3,579 for equivalent coverage—a 31 percent increase in their premium for this year. This “Roadmap” premium increase will grow over time, as the voucher’s value fails to keep up with increases in health care costs.
Indeed, the Ryan plan will mean that seniors and people with disabilities who receive the “Roadmap” voucher would face an average increase in premiums of almost $850 in 2021, which will grow to nearly $1,060 in 2025, to purchase a benefit package equivalent to today’s Medicare program.
Significantly, the Congressional Budget Office agrees with this assessment. “Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law,” the CBO found, noting that “the federal government would pay [less] for enrollees on a per capita basis, relative to the projections under current law” and “future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.”