Tumblr Icon RSS Icon

How The Romney/Ryan Medicare Plan Would Affect Today’s Seniors

Posted on

"How The Romney/Ryan Medicare Plan Would Affect Today’s Seniors"

Share:

google plus icon

The Romney campaign tries to sell its Medicare privatization scheme to seniors by arguing that the controversial premium support structure would only affect future retirees and preserve existing benefits for Americans over the age of 55. But while today’s elderly population would remain in traditional fee-for-service Medicare under the Ryan proposal, they too could be affected by Ryan’s ambitious restructuring scheme. Here is why:

As soon as private insurers start offering coverage to future retirees in 2023, they’ll do exactly what private plans are already doing in the Medicare Advantage program: cherry pick the healthiest applicants and leave sicker, more expensive beneficiaries in traditional Medicare. Mechanisms that prevent companies from skimming from the top — what wonks call “risk adjustment” — are imperfect, and so it’s likely that traditional Medicare would have to raise premiums to make up the difference.

This is where things can spiral out of control. Higher premiums encourage healthier beneficiaries who are still in traditional Medicare to opt into the private coverage, increasing costs even higher. As the Center on Budget and Policy Priorities’ (CBPP) Paul Van de Water observes, “over time, traditional Medicare would become less financially viable and could unravel — not because it was less efficient than the private plans, but because it was competing on an unlevel playing field in which private plans captured the healthier beneficiaries and incurred lower costs as a result.”

As the size of the Medicare population shrinks, “administrative costs would rise relative to benefit payments, traditional Medicare’s power to demand lower payment rates from providers would erode, and providers would have less incentive to participate in the program. As a result, people now age 55 and older might well face higher premiums and cost sharing for traditional Medicare, a more limited choice of providers, or both.”

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.