Rep. Paul Ryan (R-WI) has argued that his proposal to voucherize Medicare would not effect Americans over the age of 55, as they would still enroll in the traditional fee-for-service program. Americans currently under 55, however, would have to choose a private plan from a new Medicare exchange in 2022 that would receive an $8,000 voucher from the federal government. Only younger Americans would feel any changes, Ryan insists:
RYAN: So, specifically, what we’re saying is, if you’re 55 and above, no changes whatsoever in Medicare. But, if you’re like me, if you’re 54 and below, Medicare is going insolvent by the end of the decade. It’s going bankrupt. And it’s leading our country towards bankruptcy.
So, future seniors, 54 and below, will get a list of Medicare-approved plans, kind of like how it works today, but for all of Medicare.
But this isn’t a promise Ryan can keep. In 2022, newly-eligible beneficiaries would have to enroll in a private plan, but existing beneficiaries (those who are over 55 today) would also have the option of leaving traditional Medicare. As Ryan’s budget put it, “While there would be no disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible in the next ten years, all seniors would have the choice to opt into the new Medicare program once it begins in 2022. No senior would be forced to stay in the old program.”
That opens up the possibilities of private plans trying to lure away the healthiest beneficiaries (as is currently the case in Medicare Advantage) and of health care providers abandoning traditional Medicare patients for the higher reimbursement rates of private insurers. For chronically ill seniors who are more likely to remain in fee-for-service Medicare this means two things: higher costs (as the healthier beneficiaries exit the risk pool) and fewer doctors.
Ryan could take steps to prevent this kind of provider erosion — most doctors currently accept Medicare patients because of tis sheer size and clout — by requiring physicians who serve seniors using vouchers to also accept enrollees in traditional Medicare. But it’s unclear what the rules would be and the likelihood that today’s seniors would face the risk of adverse selection is still very great.