Please explain House Chair Ryan's Medicare proposal

[OrcasIslandBound]

Hello All,

I wonder if someone could explain the proposed Medicare changes being considered in the following link:

House budget chairman to propose Medicare, Medicaid changes - CNN.com

This proposal, by House Budget Chairman Paul Ryan, scares me quite a bit as it is suggesting that big changes will affect those of us who are under 55 today.

Thank you in advance who ever steps forward to clarify if this is good, bad, or really bad.

- Stephen

[M Paquette]

Quote:

Originally Posted by sbwitte Hello All, I wonder if someone could explain the proposed Medicare changes being considered in the following link: House budget chairman to propose Medicare, Medicaid changes - CNN.com This proposal, by House Budget Chairman Paul Ryan, scares me quite a bit as it is suggesting that big changes will affect those of us who are under 55 today.

This is the Ryan-Rivlin Plan. The actual bill is to be introduced next week. The Congressional Budget Office did a preliminary analysis last November.

www.cbo.gov/doc.cfm?index=11966 (6 page PDF document)

Key Features of the Proposal
MEDICARE
People who turn 65 in 2021 or later years would not enroll in the current Medicare program but instead would receive a voucher with which to purchase private health insurance.

Although the voucher system would not be implemented until 2021, the amount of the voucher would be calculated by taking the average federal cost per Medicare enrollee in 2012 (net of enrollee premiums) and growing that amount at the annual rate of growth in GDP per capita plus one percentage point.

• While the voucher program is being phased in, the voucher amount would be adjusted downward to reflect the fact that eligible individuals would be younger and less costly than the average Medicare enrollee.

Affected Medicare enrollees who are also eligible for full Medicaid benefits (“dual eligibles”) would no longer receive assistance from Medicaid with their Medicare premiums and cost-sharing; instead the federal government would establish a medical savings account for them and make an annual contribution to it. The amount of the contribution would be calculated by starting with $6,600 in 2012 and growing that amount at the rate of GDP growth per capita plus one percentage point.

Starting in 2021, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2032.

Eligibility for the Medicare program would not change for people who are currently 55 or older; as a result, the average age and costs of enrollees remaining in the current Medicare program would increase over time. However, enrollee premiums under Medicare would be adjusted to equal what they would be under current law.

The proposal would modify Medicare’s cost-sharing provisions and change the amount of the cost-sharing requirements that can be covered by supplemental insurance provided through Medigap policies. All of the amounts specified below are for 2013 and would be indexed in subsequent years to growth in spending per beneficiary for services covered by Parts A or B of Medicare.

• Cost-Sharing Rules — Beginning in 2013, modify cost-sharing rules:  Establish a single deductible of $600 for services covered under Parts A or B;
• After satisfying the deductible, impose 20 percent coinsurance for all services covered under Parts A or B; and
• Establish a catastrophic cap (zero cost sharing) after accruing $6,000 in cost-sharing obligations for A&B services (the $600 deductible counts toward the $6,000).
• Medigap Changes — Beginning in 2013, restrict Medigap coverage of cost sharing by:
• Requiring the beneficiary to be subject to a $500 deductible;
• Requiring the beneficiary to spend at least $2,750 before being subject to a catastrophic cap; and
• Limiting coverage of cost sharing between the deductible and a catastrophic cap to 50percent of Medicare’s cost-sharing requirement.

MEDICAID
Starting in 2013, the federal share of all Medicaid payments would be converted into a block grant to be allocated among the states. The total block grant would increase annually along with currently projected growth in the Medicaid population and with growth in GDP per capita plus one percentage point.

The federal government would fund the incremental costs of the Medicaid expansion that was enacted in March through 2020 as under current law (CBO estimated that those costs would total roughly $500 billion over that period); in 2021, those costs would be added to the block grant amount and the block grant would subsequently grow at the same rate specified above.

OTHER PROVISIONS
Several changes would be made to laws governing medical malpractice, including limits on noneconomic and punitive damages; those changes (and their effects on the federal budget) are described in CBO’s October 2009 letter to Senator Hatch.

The CLASS program for long-term care insurance would be repealed. (Because the program will collect premiums in excess of benefits payments during the 2011-2020 period, repealing this provision would increase deficits during the first 10 years.)

[samclem]

Quote:

Originally Posted by sbwitte This proposal, by House Budget Chairman Paul Ryan, scares me quite a bit as it is suggesting that big changes will affect those of us who are under 55 today.

When evaluating this proposal, there's not much point in judging it against today's Medicare spending level. I think it's fair to say that there's widespread agreement that the per recipient spending on Medicare (and Medicaid) is going to be cut. So, it's probably most realistic to evaluate Ryan's proposal against the other ways of getting the costs of these programs under control. That's the national discussion we need to have, and the sooner the better.

[Gumby]

Sounds like a real boon to private health insurers. Good luck if you have pre-existing condition.

[ziggy29]

Quote:

Originally Posted by M Paquette Starting in 2021, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2032.

Perfect! Just as I've predicted. Guess who turns 67 in 2032?

[M Paquette]

Quote:

Originally Posted by samclem When evaluating this proposal, there's not much point in judging it against today's Medicare spending level. I think it's fair to say that there's widespread agreement that the per recipient spending on Medicare (and Medicaid) is going to be cut. So, it's probably most realistic to evaluate Ryan's proposal against the other ways of getting the costs of these programs under control. That's the national discussion we need to have, and the sooner the better.

The original poster was concerned about what sort of Medicare changes would be made, and with the post being in the Health & Erly Retirement forum, I thought the best thing to do was simply post the CBO summary of the program changes.

Any discussion of spending levels, program costs, and other issues as may be relevant to the national discussion are probably better handled over in the FIRE Related Political Topics forum, here:

Ryan-Rivlin Plan for Medicare & Medicaid Reform

[samclem]

Quote:

Originally Posted by M Paquette The original poster was concerned about what sort of Medicare changes would be made, and with the post being in the Health & Erly Retirement forum, I thought the best thing to do was simply post the CBO summary of the program changes. Any discussion of spending levels, program costs, and other issues as may be relevant to the national discussion are probably better handled over in the FIRE Related Political Topics forum, here: Ryan-Rivlin Plan for Medicare & Medicaid Reform

Thanks for the factual info from the CBO.

[dgoldenz]

Quote:

Originally Posted by Gumby Sounds like a real boon to private health insurers. Good luck if you have pre-existing condition.

Pre-ex has to be covered with Medicare when you sign up during open enrollment. Sounds like moving towards a model more similar to the under-65 market to reduce overutilization. Reducing overutilization of services is the single best way to reduce the cost of those services.

When you don't pay a dime out of pocket, you don't care what they cost. If you have a Plan F Medicare supplement, your out of pocket costs are essentially $0.

[Martha]

Quote:

Originally Posted by dgoldenz Pre-ex has to be covered with Medicare when you sign up during open enrollment. Sounds like moving towards a model more similar to the under-65 market to reduce overutilization. Reducing overutilization of services is the single best way to reduce the cost of those services. When you don't pay a dime out of pocket, you don't care what they cost. If you have a Plan F Medicare supplement, your out of pocket costs are essentially $0.

Utilization is not necessarily overutilization.

[dgoldenz]

Quote:

Originally Posted by Martha Utilization is not necessarily overutilization.

Ever talk to a doctor that has senior citizens make appointments just to have someone to talk to? Doesn't cost them anything, might as well...

[Htown Harry]

Quote:

Originally Posted by dgoldenz Ever talk to a doctor that has senior citizens make appointments just to have someone to talk to? Doesn't cost them anything, might as well...

Sorry, I don't get your the point of citing this type of behavior. What part of the nation's total Medicare bill are made up of office visits?

[dgoldenz]

Quote:

Originally Posted by Htown Harry Sorry, I don't get your the point of citing this type of behavior. What part of the nation's total Medicare bill are made up of office visits?

When services cost people $0, they don't care about making the financial choice to not utilize them. Same reason people go to the ER with a $50 co-pay for common sickness when the doctor's office is closed. If they had to pay their deductible first, they would be more likely to let it go.

[GregLee]

Quote:

Originally Posted by dgoldenz Ever talk to a doctor that has senior citizens make appointments just to have someone to talk to?

Nope, never did. Did you ever talk to a doctor about that? What did (s)he tell you? Is it predominantly senior citizens that make such appointments? Being a senior citizen myself, who has never made one of these conversational appointments, of course I'm curious about the details.

[dgoldenz]

Quote:

Originally Posted by GregLee Nope, never did. Did you ever talk to a doctor about that? What did (s)he tell you? Is it predominantly senior citizens that make such appointments? Being a senior citizen myself, who has never made one of these conversational appointments, of course I'm curious about the details.

I have a couple of doctors as clients that have mentioned similar scenarios to me. I've heard about it elsewhere too. It was just an example of the many overutilized medical services....you don't hear about senior citizens heading to the mechanic for a brake job just to talk to somebody.

[OrcasIslandBound]

I thank all of you for responding. M Paquette, thanks for such a detailed explanation.

My DW and I are 53, so we're square in the cross-hairs of this new plan. It was in the news again this morning. Seems like there are two two issues:
1. Our costs will simply be higher as we'll just receive a chunk of $ from the government and have to go out and buy our own health insurance. This is somewhat ominous. However, even more ominous...
2. If we have some sort of catastrophic health incident (as I would think 100% of us will sooner or later) the coverage may be more out of pocket against us then it is under Medicare.

This type of reduction in health insurance sounds like the stuff to wipe folks out financially. Really bad idea...

Hopefully it won't come to this...

- Stephen

[FinanceDude]

Well, I am well under 55, but I am not scared of the plan. I have personally met Paul Ryan a few times, and he is passionate about trying to fix our entitlement programs. He knows his ideas will be used as political froth and he likely won't get the plan passed. However, he is not giving up on trying to make the "adults" on Capitol Hill discuss these things instead of worrying about getting re-elected and passing the buck for another 20 years.

I don't think anyone in politics knows more about the budget than Paul Ryan. If a group of politicians or a party thinks they have a better plan, I am all ears. And I am sure Congressman Ryan would be open to hearing those ideas too. Paul Ryan is a true fiscal conservative, which makes him a very lonely person in Washington these days..........

[dgoldenz]

Quote:

Originally Posted by sbwitte I thank all of you for responding. M Paquette, thanks for such a detailed explanation. My DW and I are 53, so we're square in the cross-hairs of this new plan. It was in the news again this morning. Seems like there are two two issues: 1. Our costs will simply be higher as we'll just receive a chunk of $ from the government and have to go out and buy our own health insurance. This is somewhat ominous. However, even more ominous... 2. If we have some sort of catastrophic health incident (as I would think 100% of us will sooner or later) the coverage may be more out of pocket against us then it is under Medicare. This type of reduction in health insurance sounds like the stuff to wipe folks out financially. Really bad idea... Hopefully it won't come to this... - Stephen

Think about his plan as everyone having under-65 style health insurance, but being over age 65. If you want a PPO plan with $500 deductible and 100% coverage after that, you can pay for it. If you want a $2500 deductible, choose that and save some money.

What would be nice is if you gave people the incentive to choose higher deductible plans by allowing part of the unused portion of the credit to go into an HSA for them to use for medical care. That would be smart thinking though, and we can't have any of that...

[huusom]

Quote:

Originally Posted by FinanceDude Well, I am well under 55, but I am not scared of the plan. I have personally met Paul Ryan a few times, and he is passionate about trying to fix our entitlement programs. He knows his ideas will be used as political froth and he likely won't get the plan passed. However, he is not giving up on trying to make the "adults" on Capitol Hill discuss these things instead of worrying about getting re-elected and passing the buck for another 20 years. I don't think anyone in politics knows more about the budget than Paul Ryan. If a group of politicians or a party thinks they have a better plan, I am all ears. And I am sure Congressman Ryan would be open to hearing those ideas too. Paul Ryan is a true fiscal conservative, which makes him a very lonely person in Washington these days..........

I've never met Paul Ryan but I've never known a politician that is truly honest and selflessness.

Someone told me once that the best solution is the simpliest solution. Many other countries are quite contend with their national health care system. Why can't we have it? The less bureaucracy the less cost (I mean too many different plans and insurance companies).

In nature, predators are at advantage when confusion and panick occur. Any more bandage plans will just add more confusions to our already messy health care systems will be a boon to crooked and greedy businesses.

[Martha]

The plan is freaking stupid. Our government is filled with freaking idiots who only care about money and the squeaky wheel.

There. I've said my piece.

(Keep in mind incentives work many ways. Research shows that raising deductibles cause people to go without necessary care which can drive up costs later. I know people who do not buy medications for chronic illnesses because they cannot afford the deductible.)

[Tadpole]

Quote:

Originally Posted by Martha The plan is freaking stupid. Our government is filled with freaking idiots who only care about money and the squeaky wheel. There. I've said my piece. (Keep in mind incentives work many ways. Research shows that raising deductibles cause people to go without necessary care which can drive up costs later. I know people who do not buy medications for chronic illnesses because they cannot afford the deductible.)

You are, of course correct, but I don't think that will make a difference to pundits.