The best solution is to move to a let-freedom-ring regime of high deductibles, no community rating, no standard benefits, and cross-state shopping for bargains2 (another market-based reform that's strictly taboo in the bills).In short, the best insurance is "no insurance". To Tully, it would be unfair to limit what insurers could charge the elderly:
The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured.... Under the Senate plan, insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage. So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.How much would the elderly, for whom being "elderly" is in effect a pre-existing condition putting them in a high risk pool for insurance, have to pay in Tully's "free market"? The sky's the limit. Tully shed crocodile tears over the idea that some people might want to keep their existing plans, but that those plans might not be available in the future due to the Affordable Care Act. His heart, it seems, would bleed for seniors who want to stay in a government subsidized "Medicare Plus" plan, but for some reason that concern doesn't extend to those who are happy with Medicare.
Second, the bills would ban insurers from charging differing premiums based on the health of their customers.
Oddly, Tully describes himself as providing a "defense of Paul Ryan's Medicare plan" - the plan that has so many pundits clapping Ryan on the back and talking about how "brave" and "serious" he is needs a defense? Perhaps then, unlike his peers, Tully has read the details and understands what the reaction to this plan would be if the public truly understood it. Tully isn't an ignorant man - he does a good job summarizing the problem we're facing:
If we remain on the current course, [federal health care] spending would jump [from 8% of GDP today] to 14% in that time frame.Tully tells us that Ryan's "plan" would lower the government's share "to just 5% by 2050". Let's use Tully's figures to evaluate what that might mean for seniors.
On average, the annual cost for its 46 million enrollees is roughly $13,000. The recipients pay total premiums of $1,326 a year for hospital visits and zero for physician services, and can purchase supplementary private Medigap policies that cover virtually all deductibles and co-pays for another $1,500 a year. So the enrollees pay a total of around $3,000, or 23% of the total $13,000 cost. Taxpayers cover the balance of $10,000.If Ryan's plan were put into effect right now, the government subsidy would drop by approximately 37.5%,3 so that would mean that Medicare enrollees would pay on average $6,250 per year for their health costs. Whoops - plus (let's keep it low) about 10% in additional overhead and profit for the private insurer, so just shy of $7,000 per year. With people age 65 and older earning about $30,000 per year on average, do you think that's an increase the average person would notice? And let's not forget, Ryan also plans to decimate Medicaid - I don't want to think about what your nursing homes might look like under Ryan's plans if you cannot afford a private pay facility. It has been suggested that, on average, seniors retiring this year will need $250,000.00 to cover medical expenses. With immediate implementation of Ryan's ideas can we reasonably say that would easily jump by another $150,000.00?
Here's something else to keep in mind: Even if you believe that seniors could afford to absorb the average annual cost of their care, that's not how things work in real life. Some seniors will have more expensive annual care due to their need for medications, diabetes treatment, dialysis, or other chronic health conditions - and many would obviously struggle with the cost-shift that Ryan proposes. But the real hardship would come at the near-inevitable point when an elderly person suffers a medical crisis and incurs five to six figures in medical costs through a round of hospitalization, surgery and rehabilitation services. Many seniors might scrape by, year after year, paying a 10% deductible and 20% copayment for their routine and recurring services. But the year they incur a $50,000+ medical bill? That could break the bank. Do we expect doctors and hospitals to absorb the unpaid medical costs, or do we push seniors into bankruptcy court so that they can keep their homes? And if the latter, what happens two years later when they or their spouse suffer another medical crisis?
When you see the figures for Medicare costs and inflation the first question you need to ask yourself is, "Do I care if many or most seniors cannot afford the care they need to extend their lives or to live a reasonable quality of life?" If your answer to that is "No," supporting Ryan's plan is easy. You may even find yourself echoing a talking head from the Heritage Foundation who doesn't think it goes far enough. If, on the other hand, your answer is "Yes", there are three basic responses you can offer:
Bend the Cost Curve: Attempt to determine which medications and treatments are effective, which are not effective, and which are not cost-effective as compared to alternative treatments with similar outcomes; attempt to improve preventive care and to lower the cost of care for chronic conditions; attempt to develop less expensive treatments and medications for medical conditions, common or rare, etc.
Rationing: Whatever effort we may make to bend the cost curve, we need to implement (or at least be prepared to implement) benefits caps, cut-off ages for specific procedures, limits on care based upon projected survival rates, and/or similar measures that limit the amount of subsidized care an elderly person can receive.4 If you can afford your own care, you can private pay for additional treatment. If not, sorry, you can have your church hold a bake sale, you can pass the hat, but as far as government subsidies go you're done.
Increase Premiums and Copays: Inadequate in and of itself, but by increasing premiums and copays for wealthier seniors you can continue to provide a larger subsidy to the poor.
In effect, Ryan is asking Americans to make a historic leap of faith. He projects that the newly cost-conscious customers, who'll inevitably be spending more of their own money, will shop far more carefully for health care.More cynically, he's expecting that a senior who needs a hip or knee replacement might drag through another couple of years of excruciating pain before getting the procedure, or may simply "choose" to ride out retirement immobilized in a bed or recliner. He's expecting that a poor senior with COPD will "choose" not to incur the high cost of maintaining lung capacity and instead will continue to lose lung capacity in what amounts to slow suffocation. He's expecting that a senior with diabetes may choose not to test their blood sugar as frequently as they should, and that if they lose a limb they'll have to go out-of-pocket if they want a prosthesis. Seriously - if those aren't the types of "choices" Ryan wants seniors to make, how could he expect to bend the cost curve? Or am I being unfair by suggesting that Ryan truly wants to lower the cost of healthcare as opposed to simply lowering the subsidy?
"It's very speculative how the new system would work," says Robert Moffitt, a health care policy expert at the conservative Heritage Foundation. "But we know for sure that the Ryan plan would force private providers to compete ferociously for business, and that would introduce a degree of competition into Medicare that's totally absent today."Translation: We're going to make seniors the "lab rats" of a reform that, for all we know, has a snowball's chance in H-E-Double-Chopsticks of succeeding, but who knows - we may get a pony! (And did I mention the enormous tax cut for the rich? We rich folks will more than make up for it on the back end.)"
Flashing back to Tully's concern-trolling over the ACA, he lamented that Americans would lose the "Freedom to choose your doctors":
The Senate bill requires that Americans buying through the exchanges -- and as we've seen, that will soon be most Americans -- must get their care through something called "medical home." Medical home is similar to an HMO. You're assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.How horrible! What an unthinkable loss of rights and freedoms! No wonder Tully detests the ACA and praises Ryan's plan which "is all about unleashing the market" and lets freedom ring!
Under the proposals, the gatekeepers would theoretically guide patients to tests and treatments that have proved most cost-effective. The danger is that doctors will be financially rewarded for denying care, as were HMO physicians more than a decade ago. It was consumer outrage over despotic gatekeepers that made the HMOs so unpopular, and killed what was billed as the solution to America's health-care cost explosion.
The big issue is how fast costs grow for the enrollees. With the inflation and age adjustment, the premium support payments will increase at a rate far below today's relentless escalation of 7% or so a year. The success of the Federal Employees plan is highly encouraging. Its costs are growing at a rate that's 2% lower than medical inflation in the private sector.Oh... Well then, I'm sure this is different because, um, we're talking about old people and, um.... old people don't care who their doctors are, or if they're denied care by an insurer who is looking at nothing but the bottom line. They don't care if they get to see a rheumatologist, cardiologist or orthopedist. Our misery, to them, is freedom! All hail Ryan the brave, Ryan the bold, Ryan the serious who, by substituting wishful thinking for everything difficult about healthcare reform, offers us "the best choice in a world of poor alternatives."
Even if the Ryan plan matches that success, Americans will no longer get more than 70% of their Medicare costs paid by the government. Retirees are bound to pay a much bigger share of their own medical costs. More and more seniors will choose high deductible plans, and HMO or PPO-style programs that limit choices of doctors.
1. Fantastic for others? I would assume that his own plan is comparatively gold-plated, although I welcome any authoritative correction on that point.
2. The concept of "cross-state shopping for bargains" amounts to his peddling snake oil - did you notice how credit card companies relocated to the states that allowed the highest interest rates and fewest consumer protections? The silent wish of most people who push this idea is for health insurers to do the same thing - to relocate to states that require the fewest benefits and have the least regulation, such that other states are pressured to join the "race to the bottom" and insurance covers as little as possible, allowing insurance companies to maximize their profit by avoiding coverage for any routine or recurring expenses (e.g., birth control) or special needs (e.g., hearing aids - yes, Tully specifically mentions hearing aids; he also appears concerned that insurance companies can be required to cover mental health, substance abuse treatment and even prescription drugs) while minimizing the health conditions they actually cover. Your "bargain" will mean that instead of overpaying for a bad policy from an insurer based in your state you'll overpay for a horrendous policy from an insurer based in another state who is beyond local recourse.
3. Ballpark, of course. But even with that in mind, Tully's piece suggests that the percentage I use might be low - "Even in today's weak economy, the total Medicare bill is waxing at over 7%."
4. Yes, to some degree this happens now - some people are deemed to sick or too old for certain medical procedures - but in the future the Ryan-Tilly death panels, if I may coopt that Republican term, will have to make some very difficult decisions based upon cost alone.