Getting to Know Paul Ryan’s Medicare Plan

When Wisconsin’s Paul Ryan first released his “Path to Prosperity” it was met with hosannas for his bravery, particularly in confronting the problem of Medicare’s looming insolvency.

If you haven’t read it (and here it is), it is for the most part a white paper that spells out what has gone wrong, the grim future the nation faces on its present course and the brighter future that his budget would achieve. It states what his budget will accomplish (e.g., “2.5 million additional private sector jobs in the last year of the decade”, “growth, increasing real GDP by $1.5 trillion”) but does not spell out how he would get there. Much of the text is devoted to uplift such as “Above all, this Path to Prosperity calls for a government faithful to its limited but noble mission: securing every American’s right to pursue a destiny of his or her own choosing”.

But it doesn’t detail the specific assumptions that lead to his end results. As Paul Krugman says, “It’s a plan for a plan”. When we get to Medicare, for example, it says it would:

“Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs.”

It doesn’t say what that payment will be nor is it clear what is meant by “a list of guaranteed coverage options”.

The budget itself appears as only a 10-page appendix in a 71-page document. It is not detailed. For Medicare: a single row of ten numbers for the years from 2012 to 2021.

Which is why time elapsed before reports appeared that discovered some worrisome thorns lurking in the rosy language. Economists and others had to dig further to find out what lay beyond 2021 and match the numbers against demographics to make these discoveries:

The premium payment to seniors beginning in 2022 would already be $6,000 less than the projected cost of insurance according to the Congressional Budget Office. That’s $6,000 that the average senior must pay out of pocket.

In subsequent years the Medicare payment increases at a slower rate than projected insurance costs. Seniors would have to pay an ever-greater share of their annual insurance bill.

Because the budget requires repeal of the health care bill signed last year by President Obama, that bill’s prohibition against an insurer turning away an applicant with a precondition would be void, as would the prohibition against dropping a sick client.

Does that mean that seniors now guaranteed coverage under Medicare would be tossed out into the marketplace where they would be met with increasingly dim prospects of finding any insurer willing to take them on as they age? The phrase “guaranteed coverage options” above is disturbingly vague.

What no one we’ve encountered has mentioned, and with which we take further issue, is that (a) the plan does not take effect until 2022 rather than confronting Medicare’s problems now (how can it save Medicare by doing nothing until two years before the 2024 date when insolvency is forecast?) and (b) all now over age 55 get the goodies, all under 55 get the shaft.

This stark inequity strikes us as a cynical attmpt to keep the votes of the baby boomers – the ten year population bulge of those born when the troops came home after World War Ii who have just begun to reach age 65. They, and all those already in Medicare, make no sacrifice and feel no pain. Those under 55 are told that they will go on subsidizing the older age group that will receive full rate benefits, but will be shortchanged when their time comes.

For shame, Mr. Ryan.