Health Care Experts Warn That Wyden/Ryan Plan Will End Guaranteed Access To Care For Seniors

A group of progressive health care policy analysts are pushing back against the Wyden/Ryan Medicare reform plan this morning during an event at the Brookings Institute. The analysts — Urban Institue’s Judy Feder, the Center for Budget and Policy Priorities’ Paul Van de Water, and Brookings’ Henry Aaron — will argue, in remarks obtained by ThinkProgress, that shifting beneficiaries from Medicare to a series of private health insurance plans would undermine Medicare’s “guaranteed equitable access to affordable health care” and place seniors care in the untested — and at times untrustworthy — hands of private insurers.

Relative to private insurance, Medicare’s performance “is quite impressive,” even superior, they will argue:

— RISK POOLING: Medicare does a terrific job at what any successful insurance plan must do. It pools risks without regard to people’s health status. Private insurers, in contrast, make money…by serving the healthy and avoiding the sick.

— MARKET POWER: Tens of millions of purchasers in a single pool also give Medicare the edge in dealing with providers, who are increasingly concentrated and therefore effective in driving up payments where they can. Medicare pays hospitals about 30 percent less than private insurers do; it pays physicians about 20 percent less. Whether because insurers lack the clout (or, in some cases, the market pressure), private insurers have been markedly ineffective in resisting provider pressure to increase payment rates.

— LOWER PREMIUMS: CBO finds that Medicare premiums, currently estimated to be 11 percent lower than private insurance premiums for the same benefit package, will be about 30 percent lower by the end of the next decade.

— LOWER COST GROWTH: But when it comes to what health care cost per person, Medicare’s growth rate is remarkably low. As a result of payment changes in the Affordable Care Act, Medicare per capita spending is projected to grow at an average rate of about 3 percent per year — as much as a point below per capita GDP growth.

While Feder, Van de Water and Aaron share Wyden/Ryan’s goal of reducing health care spending, they argue that there is little evidence to suggest that competition between private insurers could reduce the cost growth and that the existing premium support proposals “lack the regulatory teeth necessary to make premium support even worth considering.”


“The average Medicare enrollee today may choose among an average of 24 plans, in addition to traditional Medicare, including 10 health maintenance organizations.” And while some private plans are better at controlling costs than others, they can and do cherry pick healthier enrollees by varying the scope of benefits offered and still “fall short in the adequacy of its network, waiting times, customer services, and other factors.” Meanwhile, government is still unable to level the playing field or enforce and maintain fair competition. The “current risk-adjustment technology” is inadequate to prevent adverse selection, particularly since insurers — always concise of maintaining profit margins — “are trying to withhold data necessary to assure that risk adjustment under the Affordable Care Act.” They’re also fighting to undercut regulations that require all insurers to offer a basic set of essential benefits “by proposing that the essential health benefits package be defined in terms of a dollar value rather than a specific set of covered services.”

Finally, as Aaron will observe, given that per-person spending under Medicare “is three times that on those who will be served under the ACA, and variation in spending is correspondingly larger,” the government’s task of inserting greater competition into Medicare “would be vastly harder,” while “The profit from cream-skimming [for insurers] is that much greater.” And beneficiaries themselves could be at a disadvantage when choosing between competing plans. The Medicare population “contains many people with mental disabilities and early or advanced mental decline…to think that providing ‘clear and easy to understand information’ equips those with mental disabilities or early-state dementia to deal with competing insurers is delusional.”


Brookings has also issued a more comprehensive paper here.


CBPP’s Paul N. Van de Water explains how the plan would shift costs to beneficiaries in a new analysis here.