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Ryan’s Medicare Plan And Cost Shifting To Seniors

Rep. Paul Ryan (R-WI) does deserve some credit for responding to Ezra Klein’s questions about his plan — even if only through email — but as someone who attended eight of his town halls in Wisconsin, I can say that his staff did not spend too much time thinking about the answers. They simply molded his typical responses to fit Klein’s questions. That being said, it’s not surprising that there is so much to debunk in his replies. Klein and Jonathan Chait get at some of Ryan’s inaccuracies, so I will contain my response to question 5, in which Ryan tries to argue that his plan would not shift costs to seniors because some of them would receive a higher voucher:

5) The Congressional Budget Office says that private insurance will be more expensive than traditional Medicare insurance of the same quality, and under that analysis, your plan saves money by shifting costs. What happens if they’re right? Would you support your plan if, in 10 years, the savings proved to be primarily achieved through shifting costs to seniors?

Our reforms do not shift costs, they bring down costs. As I explained in a recent interview:

“A couple of things on that analysis. Number one, it fails to take into consideration the extra $7,800 — we’re talking about adding to low income seniors’ benefits. What we’re saying is protect those who are low income by supplementing their benefits and covering their out of pocket costs. We’re also saying as people get sicker, increase their payments to stabilize their premiums and as people get wealthier don’t subsidize them as much. It is really inaccurate to suggest that’s going to happen to everyone.

“The other thing I would say is its comparing Medicare to a fiscal fantasy, which the current system is unsustainable and it is growing at rates that are unsustainable that will crash the system. The question is: what are the kinds of reforms we are putting in place to get at the root cause of health inflation, to make our health care dollar stretch farther, to inject competition into the system so we can stretch our dollar farther. And then subsidize people more who need it more and not those who need it less.

“It is really an incomplete comparison to suggest that’s happening to everybody. Yes, wealthier people are going to pay more in the future, but more importantly there is only so much money to go around — it is finite. What we believe we should do is save Medicare so it is something the next generation can count on and subsidize people who need it the most and not as much as people who need it the least.”

The CBO analysis of Ryan’s proposal found that a “typical” 65-year old would be paying more under Ryan’s plan, regardless of income. “[A] typical beneficiary would spend more for health care…[because] private plans would cost more than traditional Medicare,” the budget office concluded. “[T]he government’s contribution would grow more slowly than health care costs, leaving more for beneficiaries to pay.”

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In fact, lower-income seniors — so-called dual eligibles who qualify for both Medicare and Medicaid — would also be harder hit (despite the additional government assistance). As the Center on Budget and Policy Priorities (CBPP) points out, the Ryan budget plan would eliminate the supplemental Medicaid coverage low income seniors receive and instead give this group — which often suffers from multiple chronic conditions — a medical savings account in the amount of $7,800. That amount would grow with inflation every year and would “fall short of what is needed to cover their expenses.” “The savings account amount would cover only 62 percent of the typical 65-year-old’s out-of-pocket expenses in 2022; this beneficiary would still have to pay an additional $4,700 in health care expenses,” CBPP concluded. “This would consume 34 percent of the income of a Medicare beneficiary living at the poverty line (an estimated $13,620 for an individual in 2022). “