Ryan-Rivlin Plan for Medicare & Medicaid Reform

[explanade]

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?

 

[Htown Harry]

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.

 

[jdw_fire]

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

 

[rescueme]

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.

 

[samclem]

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.

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.

 

[Independent]

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.

 

[samclem]

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.

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.

 

[Independent]

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/ReportsTrustFunds/downloads/tr2010.pdf

 

[Independent]

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.

 

[M Paquette]

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.

 

[samclem]

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.

 

[explanade]

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?

 

[M Paquette]

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/resources/pdf/RL30631.pdf

What about their staff and other political appointees?

They're on regular FERS rules.

 

[explanade]

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.

 

[donheff]

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.

 

[Texas Proud]

Well, if it goes through then I miss the old system by one year...

And I also missed by one year my mega healthcare for retired employees... they offered people with 15 years of service group rates for people 55 and older... the new CEO thought it was bad and got rid of it... but grandfathered in people on it and those over 50... I was 49...

Seems I am barely on the wrong side of most of the fixes no matter when and where they are occuring...

 

[Htown Harry]

Seems I am barely on the wrong side of most of the fixes no matter when and where they are occuring...

It all balances out, Tex. You came of age on the fun side of the change in drinking ages from 18 to 21.

 

[dgoldenz]

Here's one thing the plan does: reduce the debt! What a novel idea. Still waiting for the administration response as to how THEY plan on reducing the debt and fixing Medicare/Medicaid/SS. I won't hold my breath.

 

[explanade]

So would raising taxes.

But people don't want that.

Remains to be seen if people are willing to say no more Medicare for those under 55, after decades of paying Medicare taxes.

 

[dgoldenz]

So would raising taxes.

But people don't want that.

Remains to be seen if people are willing to say no more Medicare for those under 55, after decades of paying Medicare taxes.

Where does it say no more Medicare? Maybe I missed something. The true solution lies with some combination of tax increases and spending cuts, but "tax the rich" will not solve the debt crisis.

 

[chinaco]

Translation:

Step 1 - Privatize Medicare and Medicaid and lump them together.
Step 2 - Well after all it really is a welfare program so only those below the line of poverty get the tax credit (which is funneled straight to the insurance company). But don't worry... the rest of you can buy in. But it is going to be very very expense! Wow look after that you are in poverty. Oh... but you make too much to get the lower rate!


I am fine with fixing the funding issue... but I fear a shell game is afoot which will translate to "Oops... well lookie there... ezpeazy... we got rid of it after all". [collective GOP plan]They are so dumb... they didn't even notice!

I find it outrageous that the GOP will not address the overall problem... just trying to avoid their lack of fiduciary responsibility with SS and Medicare!

If they are not willing to create a national plan that includes everyone... Forget it!

Next step in the strategy.... Let's take another run at SS again. If at first you don't succeed [GWB] then try, try again. After all.. It is a welfare program!


My first stop to recover the taxes avoided over the last 30 years... is an old style inheritance tax for the next 30 years to fund the gap. They can pay back those tax breaks they got over the last 30 years and kept spending!

Look at some of the interviews in this documentary by a J&J heir. This is not directly related to the medicare debate... but it show the mindset of the big contributors that are funding this drive!



The One Percent


If you do not watch this entire segment... jump to the last minute of segement 1 and the beginning of segment 2. at a wealth conference for the mega rich! Of course they open up.... they are talking to an insider!

It looks like most of it is on youtube in 8 sections.

YouTube - The One Percent 1/8

 

[samclem]

I find it outrageous that the GOP will not address the overall problem... just trying to avoid their lack of fiduciary responsibility with SS and Medicare!

This is what taking responsibility looks like: Addressing the problem (cost growth) and not just throwing more money at the problem and bankrupting the country.

If they are not willing to create a national plan that includes everyone... Forget it!

Do you reject the present Medicare system because it doesn't cover everyone? Anyway, the new health care law plus this revision in Medicare covers just about everyone. If it were to pass, I think it likely that the health care exchange systems would merge, though the funding streams would likely stay distinct (just due to governmental inertia).

Resistance to change, sticking with old policies just because they are old--which party is doing that now? We need new labels for our political players since "conservatives" and "progressives" sure doesn't seem appropriate today. I think the folks now known as "conservatives" should retake their historical title of "liberals" --with the traditional emphasis on individual liberty and freedom to choose.

 

[rescueme]

I find it outrageous that the GOP will not address the overall problem... just trying to avoid their lack of fiduciary responsibility with SS and Medicare!

I find it outrageous that any one party is looked upon as the "savior" of any problem that occurs in this country, or responsible for all of its challanges.

Somewhere along the line, representative government has been replaced by partisan government. True that it has always been so, but it seems lately that it has gotten worse.

It's like saying that in any "marriage" only person is responsible for fixing all the challenges that come up in life. That's not reality, since both share the blame of the problem in some way, and both are responsible to come up with a solution. The only difference is in the "leadership" of our basic two-party system can't get a divorce - and "we", their "children" suffer from their transgressions (BTW, my parents were divorced, so I know how the children of any toxic environment feel).

I don't care who is "in power"; just fix the dam*ed problem...

BTW, FDR (a Democrat) signed SS into law. Johnson (a Democrat) signed Medicare into law. In either case, a veto was not involved so I'll just assume the president of the era basically agreed with the final bill presented by congress.

If anything, I would say that the Dem's share in (what you commented on) "fiduciary responsibility". Sorry, but I don't see any constructive "leadership" in the two main parties...

 

[donheff]

Anyway, the new health care law plus this revision in Medicare covers just about everyone. If it were to pass, I think it likely that the health care exchange systems would merge, though the funding streams would likely stay distinct (just due to governmental inertia).

Why do you think they would merge? I would expect them to stay separate so the insurers can keep rates low for the younger group. I expect it would take a legislative mandate to merge them. But the GOP would be hard pressed to mandate merger since they don't acknowledge the legitimacy of the Obama program in the first place. I would be less skeptical if this was proposed as an extension of the current plan to the senior population rather than a separate privatization of Medicare with its high cost pool.

 

[Hamlet]

Isn't that part of the health care bill that the Republican's are working to repeal?

I think the only way this is going to work at all is if the insurance companies are forced to take all of the voucher folks at the same price. Otherwise they are going to cherry pick the healthy seniors and we will be left with a group that is uninsurable.

I'm very sceptical that moving to vouchers to buy private insurance is going to make anything cheaper. In the history of insurance, I would be hard pressed to think of anything it has made cheaper.

That isn't what insurance is for or is good at. Insurance is good for spreading a small risk of something very expensive happening. When that risk becomes relatively large, all insurance does is add cost.

I think scaling back the services that Medicare will pay for (as opposed to just reducing the re-imbursement rate, which is probably already too low) is a better option.

Have you heard of "health insurance exchanges"? That's how we can address this problem.