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Old 04-03-2011, 08:43 PM   #21
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This sort of program would be very effective applied to the entire population. Applied only to seniors, it will just deprive them of access to qulaity care. Two tier medicine- it is saying to practitioners- you can practice in the free market for younger people, or in this price controlled market for seniors. Oh golly, how can I decide? Do I want to drive a Mercedes or take the bus?

Ha
I see your point, but compare it to what we have right now (Medicare with set rates for services). The present situation is exactly the two-tier system you describe, which is why seniors are increasingly having trouble finding doctors to treat them (because it's more rewarding to treat people with private insurance). The expanded private insurance for seniors makes the system better for them--no per-procedure government limits on reimbursement. On top of that, as the under-65 market goes increasingly to individually-purchased insurance (through the "exchanges") we'll have a convergence of these markets--likely the oldsters and the young-unz will all be buying insurance through the exchanges. The two-tier system will be eliminated.

Which really just leaves us to fret over the decreasing pool of those souls left in the legacy single-payer Medicare system. If the vouchers prove to be popular, I can see those in traditional Medicare being offered some options.
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Old 04-03-2011, 08:50 PM   #22
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Here's some analyses I found useful and interesting. I make no claim on their neutrality, but they do cover a spectrum of views:

Ryan-Rivlin Plan Would End Guaranteed Medicare, Shift Medicaid Costs To States And Beneficiaries — Center on Budget and Policy Priorities

The Rivlin-Ryan Plan to Reform Medicare - By Reihan Salam - The Agenda - National Review Online

Uwe E. Reinhardt: Restructuring Medicare and the Rivlin-Ryan Plan - NYTimes.com

www.medicarerights.org/pdf/Deficit-Reduction-Proposal-Fact-Sheet.pdf

This one summarizes one of my fundamental worries with the concept:

Yglesias » What’s the Point of Medicare Privatization?
"[Ryan-Rivlin] sets a hard cap on Medicare expenditures, thus reducing government outlays. Then in an unrelated move, it dismantles the publicly administered single risk pool of Medicare and replaces it with multiple privately administered for-profit risk pools.

The combination of these two moves is a sleight of hand designed to make you think that the structural shift is “saving money” when in fact it does nothing of the sort. Creating multiple privately administered risk pools doesn’t offer any efficiency gains. It simply creates an adverse selection problem and ensures that the rationing decisions made necessary by the hard cap will be made by employees of for-profit firms rather than government employees.

It also makes the political economy of restraining Medicare spending worse, since in addition to senior citizens and health care providers you’ll add insurance companies as a new constituency ready to demand that Medicare account for an ever-larger share of national output."

Ryan-Rivlin pairs the spending cap in Medicaid with passing on the cost escalation and administrative risks to the states. One has to ask why the same approach isn't proposed for Medicare.
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Old 04-03-2011, 08:52 PM   #23
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Anyone know where to find an analysis that relates the 1.45% Medicare payroll tax to the present expenses and projected future expenditures?

A tax increase is neither my first choice nor the complete solution, but I'd like to know what the options are. (By way of comparison, most analyses of Social Security fix-it proposals readily provide comparisons between a tax increase and the various flavors of benefit adjustments that could achieve balanced spending.)
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Old 04-03-2011, 08:52 PM   #24
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I think we've had the voucher discussion before.

I think of it this way, under current law, any employer that provides subsidized health insurance could provide vouchers instead. The employees would be free to purchase individual insurance from any company they like. They have the incentive to get the best cost/benefit combination since the employer sets the voucher amount at a level that's less than the average cost of insurance.

How many employers think they can significantly reduce their costs by going to vouchers? How has it worked in practice for those who have tried it? (I think the federal government does something like this for civilian federal employees. How has that worked out?)

Another comparison would be the current Medicare Advantage program which gives Medicare recipients a type of voucher with an incentive to be smart consumers. How has that worked?

It seems pretty clear to me that we ought to look at medical insurance voucher programs today and evaluate them before we decide that we're going to gain a lot by moving all Medicare recipients to vouchers.
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Old 04-03-2011, 09:31 PM   #25
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I think of it this way, under current law, any employer that provides subsidized health insurance could provide vouchers instead.
Under the present law, employers don't need to provide any health insurance at all. They could get the same tax benefits (deductability of costs) simply by providing higher employee pay. The main reason they provide insurance is because they can put all their employees together and get a group rate that is unobtainable to the employee as an individual. It's a "special deal" that the employee cannot get on his own, with or without a voucher from his employer. Depending on how the new exchanges (for those under 65 or over 65) are set up, that same advantage (no underwriting, same rates for all) would then be available to individuals. That's an entirely different set of conditions than what exists today, so I don't think we can say that the lack of employer vouchers now is evidence of anything.
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Another comparison would be the current Medicare Advantage program which gives Medicare recipients a type of voucher with an incentive to be smart consumers. How has that worked?
Well, its worked fine for the people with the Medicare advantage plans, they like them a lot. It hasn't done a good job of controlling costs for the reasons we discussed previously--the government's inept establishment of target rates and feedback mechanisms.
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Old 04-03-2011, 10:35 PM   #26
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So this plan could be simply characterized as privatization of Medicare?

Would that work better than the attempt to privatize Social Security?

Or the plans for private school vouchers?
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Old 04-03-2011, 10:59 PM   #27
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So this plan could be simply characterized as privatization of Medicare?
That would be a simplification, for sure, but from what I see so far it is accurate.

Another would be that it switches Medicare from being a defined benefit program to a defined contribution plan.
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Old 04-04-2011, 05:59 AM   #28
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The main reason they provide insurance is because they can pUnder the present law, employers don't need to provide any health insurance at all. They could get the same tax benefits (deductability of costs) simply by providing higher employee pay.ut all their employees together and get a group rate that is unobtainable to the employee as an individual. It's a "special deal" that the employee cannot get on his own, with or without a voucher from his employer. Depending on how the new exchanges (for those under 65 or over 65) are set up, that same advantage (no underwriting, same rates for all) would then be available to individuals. That's an entirely different set of conditions than what exists today, so I don't think we can say that the lack of employer vouchers now is evidence of anything.
this is why vouchers for individual policies will basically screw everyone
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Old 04-04-2011, 06:12 AM   #29
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Ryan-Rivlin pairs the spending cap in Medicaid with passing on the cost escalation and administrative risks to the states. One has to ask why the same approach isn't proposed for Medicare.
It may have to do with separation of state/federal powers.

Medicare is federally supported/administered.

Medicaid is state administered (with each state specifying their own "rules") but federal money is given to the state to assist them in funding the program for low-income/disabled folks who never qualified for the federal program - such as those who don't qualify for Social Security Disability, along with Medicare, which covers those that have worked in the past, and have the SS credits to qualify.
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Old 04-04-2011, 08:09 AM   #30
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this is why vouchers for individual policies will basically screw everyone
Have you heard of "health insurance exchanges"? That's how we can address this problem.

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Another would be that it switches Medicare from being a defined benefit program to a defined contribution plan.
Agreed. Unfortunately, enactment of the legislation would leave insurers, health care providers, and seniors all on the same political side, pushing for continual increases in the size of government vouchers, so the size of the "defined contribution" might not be as firm as the "GDP+1" might lead one to believe. But that's not a problem with this legislation, per se, we already have the same problem with Medicare. It's a problem whenever the government is in charge of collecting and spending money. Various interests will use the political process to get the government to seize the personal property of private citizens and give it to them. This is perhaps the biggest challenge we face as a nation today.
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Old 04-04-2011, 09:04 AM   #31
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Under the present law, employers don't need to provide any health insurance at all. They could get the same tax benefits (deductability of costs) simply by providing higher employee pay. The main reason they provide insurance is because they can put all their employees together and get a group rate that is unobtainable to the employee as an individual. It's a "special deal" that the employee cannot get on his own, with or without a voucher from his employer. Depending on how the new exchanges (for those under 65 or over 65) are set up, that same advantage (no underwriting, same rates for all) would then be available to individuals. That's an entirely different set of conditions than what exists today, so I don't think we can say that the lack of employer vouchers now is evidence of anything.

Well, its worked fine for the people with the Medicare advantage plans, they like them a lot. It hasn't done a good job of controlling costs for the reasons we discussed previously--the government's inept establishment of target rates and feedback mechanisms.
The employer may get the same corp FIT treatment on medical insurance premiums as on wages, but that's not the whole tax story. The employer gets a different FICA treatment, and the employee gets different FIT and FICA. Since the employer is willing to manage compensation to reduce employee taxes, the tax total tax treatment is a large part of the decision to subsidize group medical.

You're correct, another reason that employers subsidize group medical is that they can arrange for some employee-friendly terms. Group is more efficient from the insurer's point of view (economies of scale) and those savings come back to the employer/employee. Group also allows for a more efficient risk selection system, and employees like that. You are correct that for these two issues, the details of the design are important. I think it's very unlikely we'll get something that's as efficient as current group insurance for either of these if we go to vouchers - and that's why most employers don't use vouchers. But I've got an open mind, I'd be willing to look at actual experience with vouchers in an employer setting.

Yes, Medicare Advantage is fine for people who take advantage of the fact that the gov't puts more dollars into MA per enrollee than it puts into traditional Medicare. But the R/R claim is that they can reduce costs with vouchers. I'd like to get MA premiums down to traditional Medicare levels, then see if MA plans provide better benefits. R&R claim that should happen, let's try it and see if that's true before we force everyone to use vouchers because we believe an untested theory.
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Old 04-04-2011, 09:09 AM   #32
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I think it's very unlikely we'll get something that's as efficient as current group insurance for either of these if we go to vouchers - and that's why most employers don't use vouchers. But I've got an open mind, I'd be willing to look at actual experience with vouchers in an employer setting.
Why do you believe that a very large (regional or even national) group size would be less efficient than smaller company-sponsored groups? Yes, the per-recipient costs might be higher, but that would be expected since people who are employed are healthier than those who aren't (really sick people can't hold a job). Since we've got a goal to cover everyone, we'll be paying for those less-well people anyway in some manner. I don't think such a large pool would be less efficient. After all, employers have admin costs to run these health care programs through many small pools, these costs should be included in any overall look at efficiency.

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Yes, Medicare Advantage is fine for people who take advantage of the fact that the gov't puts more dollars into MA per enrollee than it puts into traditional Medicare. But the R/R claim is that they can reduce costs with vouchers. I'd like to get MA premiums down to traditional Medicare levels, then see if MA plans provide better benefits. R&R claim that should happen, let's try it and see if that's true before we force everyone to use vouchers because we believe an untested theory.
Okay, but let's make it a fair test and dump the inane government-mandated structure that now virtually guarantees Medicare Advantage will have higher costs than traditional Medicare.
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Old 04-04-2011, 09:20 AM   #33
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Anyone know where to find an analysis that relates the 1.45% Medicare payroll tax to the present expenses and projected future expenditures?

A tax increase is neither my first choice nor the complete solution, but I'd like to know what the options are. (By way of comparison, most analyses of Social Security fix-it proposals readily provide comparisons between a tax increase and the various flavors of benefit adjustments that could achieve balanced spending.)
Under current law, the 1.45% + 1.45% payroll tax only funds Medicare Part A (hospital insurance). It provided $190 billion of the $509 billion that Medicare spent in 2009. "General Revenue" was a little larger at $211 billion.

The 2009 details are in Table II B1, and the outlook is in Figure II D2 of the Trustees Report https://www.cms.gov/ReportsTrustFund...ads/tr2010.pdf
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Old 04-04-2011, 09:35 AM   #34
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Why do you believe that a very large (regional or even national) group size would be less efficient than smaller company-sponsored groups? Yes, the per-recipient costs might be higher, but that would be expected since people who are employed are healthier than those who aren't (really sick people can't hold a job). Since we've got a goal to cover everyone, we'll be paying for those less-well people anyway in some manner. I don't think such a large pool would be less efficient. After all, employers have admin costs to run these health care programs through many small pools, these costs should be included in any overall look at efficiency.


Okay, but let's make it a fair test and dump the inane government-mandated structure that now virtually guarantees Medicare Advantage will have higher costs than traditional Medicare.
I think a voucher system replacing Medicare has three expenses we don't see in traditional Medicare.
1) Individuals will be moving from one carrier to another, which means that carriers need to keep track of who's covered for which expenses,
2) Individuals make decisions based on marketing and sales efforts from the carriers, those efforts involve costs.
3) We know that some people have prospectively much higher costs than others. Carriers want to get a slightly better than average group or they want to get payments that vary by risk. The first approach means marketing dollars, the second some risk assessment system. Both have costs.

The only "inane government-mandated structure" I know of in Medicare Advantage is the decision to pay MA carriers more than we spend in traditional Medicare. I assume the carriers lobbied for that, and it might even have made sense when they were trying to get up to scale. But we need to get payments down to the traditional Medicare level. I don't know of any other changes we need to make to MA to make it a good test bed for vouchers.
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Old 04-04-2011, 12:22 PM   #35
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Idle thought... The average age of representatives is 57.2 and senators 63.1 (as of 2009). That nicely grandfathers them into the old Medicare plan, although as Congresscritters they continue their coverage after leaving office, still at the princely rate of $503/year.

Perhaps the bill should also move all members of Congress onto the Medicare voucher system, purely as a check on viability, of course.
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Old 04-04-2011, 12:30 PM   #36
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Idle thought... The average age of representatives is 57.2 and senators 63.1 (as of 2009). That nicely grandfathers them into the old Medicare plan, although as Congresscritters they continue their coverage after leaving office, still at the princely rate of $503/year.

Perhaps the bill should also move all members of Congress onto the Medicare voucher system, purely as a check on viability, of course.
Okay. But, it would be great if we could also limit their out-of-pocket spending on health care. These folks are (in general) very wealthy, and populist calls to limit their government pay and benefits miss the mark.

Maybe split the difference: The ones older than 55 have to live in traditional Medicare, and the younger ones get to live with the vouchers. Out of pocket expenditures by them for health care are limited to the national average for each program.

While we are dreaming, make each of them (and leadership in the Executive Branch) complete their tax forms without assistance except from the IRS "help" line.
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Old 04-04-2011, 12:53 PM   #37
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If they're in Congress for just one term, are they eligible for health care and pension for the rest of their lives?

What about their staff and other political appointees?
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Old 04-04-2011, 01:04 PM   #38
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If they're in Congress for just one term, are they eligible for health care and pension for the rest of their lives?
They have to have 5 years of service, so 2 1/2 terms for a representative, or 1 for a senator.

http://www.senate.gov/reference/reso...df/RL30631.pdf

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What about their staff and other political appointees?
They're on regular FERS rules.
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Old 04-04-2011, 01:12 PM   #39
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That's messed, up, one lousy Senate term to get lifetime healthcare.

I remember that one of the motivations Steve Jobs had for returning to Apple payroll was for the health care coverage for his family. He only wanted a $1 salary but cared more about the coverage.
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Old 04-04-2011, 02:56 PM   #40
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That's messed, up, one lousy Senate term to get lifetime healthcare.

I remember that one of the motivations Steve Jobs had for returning to Apple payroll was for the health care coverage for his family. He only wanted a $1 salary but cared more about the coverage.
Not quite, they have to retire to get continuing health care. A young, congressman with 5 years of service would not qualify for an immediate pension so no health care. Also someone mentioned $500 but I think they pay the same rate for health care as all Federal employees. It is a decent plan but it isn't cheap.
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