• Here’s a question to ask Romney or Ryan

    Last week, I noted the significant differences between Paul Ryan’s proposals, from his 2012 budget to Ryan-Wyden to his 2013 budget. I also noted that while it would be tempting to campaign against the 2012 budget, which massively shifted costs onto seniors, his later proposals did that to a far lesser extent.

    Or did they?

    Governor Romney has endorsed Paul Ryan’s latest plan, which is specific in that it will reduce future Medicare spending by unleashing the power of the free market through competitive bidding. But what if that doesn’t happen? Well, just like the ACA, his law backstops the growth of Medicare spending at GDP + 0.5%.

    The ACA is explicit about what will happens if growth goes above that amount. The IPAB will make recommendations on how to cut it. Congress will have to override those recommendations to stop them, and have their own ideas that save just as much. It’s likely those recommendations would involve reducing provider payments. But it’s the hope of those who support the ACA that other provider-based changes, like ACO’s and the excise tax, will keep the IPAB from having to act.

    Gov. Romney’s plan repeals all of these interventions. There’s only competitive bidding. In a must-read post yesterday, Kevin Drum makes the case that competitive bidding won’t work. When it doesn’t, he further makes the case that cost-shifting will once again rear its ugly head:

    So again the question is: what happens if health providers bid for Medicare contracts but the bids all come in higher than Ryan’s growth cap? Do premiums go up for seniors? Ryan doesn’t say so, but then again, he also refuses to say what would happen. But there’s no fairy dust here. If costs under the Ryan plan go up more quickly than his growth cap — and they almost certainly will — then someone has to pay the difference. And that someone is either beneficiaries or taxpayers or healthcare providers. There aren’t any other choices.

    But it can’t be taxpayers, because that undermines the whole point of the plan. And it can’t be providers, because Ryan’s plan has no mechanism for cutting payments to providers. In fact, he and Mitt Romney have recently abandoned even the existing provider cuts contained in Obamacare. So all that’s left is seniors. Every year their voucher will cover less and less of the cost of the cheapest plan, and seniors will have to pay more and more out of their own pocket. By refusing to address this issue, Ryan has successfully kept things vague enough that no one can produce hard numbers about how much more seniors would end up paying. But it would be a lot.

    I have to agree. This is likely worth a question to Gov. Romney or Rep. Ryan. Will seniors be on the hook? If not, what’s the alternative?

    @aaronecarroll

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    • Aaron,

      I’m trying my hardest to reconcile this post, your recent piece on CNN.com, the CBO and KFF reports on the anticipated gap between voucher and plan cost for seniors in 2022, the WSJ Review and Outlook piece posted yesterday, and the Song, Cutler, Chernew JAMA article cited by both the WSJ and yourself to prove your respective points.

      From what I can gather it appears the CBO scored an older version of Ryan’s plan so the $6400 is an exaggeration, but the logic still holds. The WSJ says that the JAMA article indicates seniors would save $768 or so per year assuming they left Medicare and selected the lowest cost plan in their region. In your CNN piece you say that this saving would only occur once.

      Are people discussing different version of Ryan’s/Romney’s/Wyden-Ryan’s proposals? Are people obscuring important details to make a point? Am I just bad at reading things?

      Thanks for your help,
      Calvin

    • Note that the Medicare section of Ryan’s 2013 budget does stipulate that if plan costs exceed the GDP +.5% cap, means-tested seniors, defined according to the means-testing thresholds for Medicare Parts B and D, will pay more for their policies. The poor will allegedly be protected from premium increases by Medicaid, notwithstanding Ryan’s huge projected Medicaid cuts. But the status of those in the middle remains ambiguous if, as postulated, plans want to raise their prices in excess of the cap.

      Also, just as Ryan’s current plan (in the 2013 budget) shouldn’t be confused with the plan he put forward in 2011, it also shouldn’t be conflated with the Wyden-Ryan white paper. While the paper does not mention IPAB, it alludes cryptically to IPAB-like intervention on the part of Congress: “To offset an increase in the cost of Medicare beyond the growth limit, Congress would be required to intervene and could implement policies that change provider reimbursements, program overhead, and means-tested premiums.” The Ryan 2013 budget drops all reference to cuts in provider reimbursements and devotes a lot of rhetorical energy to demonizing IPAB and “bureaucrat control.” I explored differences btwn Wyden-Ryan and the Ryan 2013 budget here: http://xpostfactoid.blogspot.com/2012/08/how-ryan-duped-wyden-cont.html

    • It seems to me that the Ryan (Romney/Ryan, Ryan-Wyden) plan will ration (Medicare) health care according to the ability to pay; it does so by shifting some of the cost from the government to the individual who will then be limited to the health care he can afford.

      The ACA will ration health care by reducing payments to (Medicare) providers who will then decline Medicare patients.

      Both plans offer pie-in-the-sky hopes of reducing the costs of medical care while retaining the availability and quality of care, but these hopes are unproven and, in my opinion, unlikely to be sufficient to solve the financing problem.

      Is there any realistic way to control the costs of health care without rationing? I am doubtful and believe we need to develop sensible plans for rationing. We simply cannot afford all the health care we desire so we need to decide how much health care we’re willing to pay for.

      • exactly, people keep trying to come up with the “golden plan” The plan that will have severe spending cuts that result in great savings…. while never cutting any services…

        In other words, people want to have their cake and eat it too.

        And what exactly is the IPAB going to do to reduce costs? can someone please explain that to me?

        If they cant require seniors to pay more and they cant ration….. what are they going to do?

        What is the magic thing that is going to make medicare solvent? Can anyone list at least 5 steps?

        5 steps that are going to have NO NEGATIVE EFFECT on seniors at all? And remember if it has a negative effect on doctors, chances are its going to have a negative effect on seniors.

    • Ryan has multiple plans. Romney has a vague outline of a plan. The way I look at is, the first Ryan plan is the one he prefers. If Romney wins and carries enough of the vote, they would push the Romney plan in that direction. If they squeak by on chads somewhere, I think the Romney plan looks more like the most recent Ryan plan.

      However, I dont know if they can get that past the GOP base. It has what is really a public option. It has exchanges. After opposing the ACA, are they going to vote for ACA lite?

      Steve