The Romney/Ryan Medicare plan is pretty straight forward: end the guaranteed benefit, and transition seniors into a voucher system – effectively giving the elderly a coupon towards private insurance. What happens when the value of the coupon fails to keep up with rising costs? Too bad – you should have thought of that before Election Day 2012.
To hear the Republican candidates tell it, this is worthwhile anyway, not because they’re obsessed with privatization or tearing down public pillars of American society, but because upending the entire Medicare system would save money and improve our broken finances.
The detail that often goes overlooked is how exactly turning Medicare into vouchers would “save money.” As a practical matter, the Kaiser Family Foundation found, it’d save the government money, but cost you more, even if you opted to stay in the public system.
Using 2010 data as a model, Kaiser’s study found that among seniors who chose to remain in traditional Medicare, more than half would have paid higher premiums. Just under half would have paid the same. That would’ve yielded an average premium hike of $720 annually for seniors who chose to remain in traditional Medicare.
Among seniors with private Medicare Advantage plans, 88 percent would have paid higher premiums unless they switched to a cheaper plan with less generous benefits. On average, seniors already in private plans would have paid $1,044 more annually, according to the study.
Taken together, 59 percent of Medicare beneficiaries would have ended up paying higher premiums than they do in the current system if they remained in their current plan.
In fairness, the Kaiser Family Foundation’s research had to fill in certain gaps because the Romney/Ryan campaign refuses to explain in detail how their proposal would work. But based on all available information, the analysis is more than fair.
What’s more, as Sahil Kapur added, the study “does not project the longer-term implications for traditional Medicare. Many analysts warn that over time, sicker and older patients would choose traditional Medicare over private plans as private insurers tailored their plans to younger, healthier beneficiaries. Without strict rules and adequate risk adjustment, this would put traditional Medicare premiums on a ‘death spiral’ and the public plan would collapse.”
More so than any time in a half-century, Medicare is quite literally on the line. We’re looking at a scenario in which the program may be scrapped as early as the spring depending on who wins in 21 days.