Great Healthcare Debate: How Romney, Ryan, Wyden Will Save Medicare



By: Ankur A. Shah
The Great Healthcare Debate column previews the upcoming 2012 US Presidential Election, and the ramifications it will have on our healthcare system.

With the recent selection of Representative Paul Ryan as the Republican Vice-Presidential candidate, both political parties have been attacking their respective opponent’s plans for Medicare. With widespread propaganda and misinformation, I felt it necessary to clarify the differences between the two parties’ plans for Medicare and health care spending in general. Because the effects of these programs will influence us, the current generation, more than anybody else, it is important that we make informed decisions regarding our future, and understand that only the Ryan-Wyden Bipartisan Plan will Save Medicare.

romney-obamacare

Under the ACA:
Physician reimbursements will be selectively cut by an unelected board coined the Independent Payment Advisory Board (IPAB). This board will be responsible for meeting Medicare growth rate targets to control costs within the program (
1).

Medicare Part C, or Medicare Advantage, is significantly reduced. This allows seniors to be picked up by traditional Medicare, reducing their out-of-pocket payments (
1).

The Part D coverage gap, or “donut hole,” will be eliminated. Part D premiums will increase for individuals who earn over $85,000 and couples with income above $170,000 (
1).

Hospital and physician payments will be given based on quality reports (
1).

Medicare Disproportionate Share Payments will be reduced (
1).

Most health care providers will see a permanent 1.1% reduction in payment updates (
1).

The Medicare Part A (Hospital Insurance) payroll tax will be increased for families with income over $250,000 and individuals who earn above $200,000 to help finance the program (
1).

An estimated 15% of hospitals will be made unprofitable from Medicare reimbursement decreases (
1).

Approximately $700 billion will be taken out of the Medicare Trust Fund to fund the ACA’s new middle-class entitlement in order to insure all American citizens (
2).

According to the CBO, Medicare is predicted to become bankrupt by 2026 instead of 2017 because of the ACA (
3).

Under the Ryan-Wyden Bipartisan Plan:
Current seniors and those nearing retirement would see no change in their Medicare plans. After ten years, seniors will be given premium-subsidies via the Medicare Exchange, similar to the insurance exchanges created by the ACA, which would allow seniors the option of purchasing the insurance best fit for their needs (
4).

Premium-subsidies would depend on both the cost of popular, included health plans and on the income of the senior in question (
2, 5). This is in contrast to the voucher program critics are claiming would limit coverage for the elderly, as vouchers fail to acknowledge the costs of health insurance plans at that time (5).

Premium support will be limited to 1% above the rate of inflation, further controlling the costs of Medicare and ensuring coverage for future senior citizens (
4).

Seniors with lower incomes will receive higher premium-subsidies than those with higher incomes; however, all seniors will have an equally affordable opportunity to purchase health insurance based on their income (
2).

Seniors who choose cheaper plans than the benchmark plans established will receive a rebate for the difference between their plan and the benchmark (
5). Those who choose expensive plans with maximum benefits because they can afford it will be required to pay the difference (4).

The Medicare Exchange will foster competition among insurance companies vying for seniors, thereby naturally containing costs (
2).

Seniors who do not want to participate in the Medicare Exchange are given the option of sticking to traditional fee-for-service Medicare via a competitive bidding process. This process will regulate costs by forcing health care providers to compete against one another. It will thus ensure first-rate quality of care for patients (
2).

Analysis
As demonstrated by the facts given above, both parties’ plans acknowledge that Medicare must be reformed but take distinct approaches in solving the problems associated with Medicare. The Affordable Care Act implements many cost-saving measures in Medicare and utilizes performance-based reimbursement schemes, which seem promising. In contrast, the Ryan-Wyden Plan puts health care in the hands of patients, providing insurance premium subsidies for those eligible for Medicare. While both plans have unique ideas, it is important to note key issues that are often left unsaid.

The Affordable Care Act increases Medicare’s solvency and reduces patients’ out-of-pocket payments, that is, on paper. In fact, it will reduce access to care by giving physicians less financial incentive to accept Medicare patients by reducing their reimbursements. Furthermore, 15% of hospitals are expected to become unprofitable due to reimbursement cuts made by the ACA (
1). While these cuts save about $500 billion for Medicare, fewer hospitals will be accessible for patients (1), increasing their waiting times at available hospitals and increasing unemployment for those who worked in the hospitals.

While President Obama claims that Medicare’s solvency is extended to 2026, he neglected to mention that his savings are based on the assumption that both the hospital payment cuts previously mentioned and the 30% reduction in physician reimbursements from the Sustained Growth Rate (SGR) formula will occur (
1, 3). Keep in mind that Congress has delayed the SGR cuts every year since 2003 and has instead increased or maintained physician reimbursements (6). Furthermore, $700 billion, including the aforementioned politically improbable savings, are being taken out of Medicare to finance health insurance exchanges and insurance subsidies for millions of additional Americans (1).

With this being said, the Ryan-Wyden Plan for Medicare is not flawless. Seniors’ out-of-pocket payments will potentially increase and the eligibility age for Medicare must be raised to ensure solvency for future generations. Yet, I believe that it is more important to propose a practical plan for Medicare that acknowledges our problems and generates legitimate solutions than one that lies to the American people through flattering rhetoric.

The ACA ignores two important facts:
1) Its savings are based upon political scenarios that have historically proven highly unlikely.
2) It is fiscally impossible and morally wrong to guarantee coverage to millions of citizens when we cannot afford to do so.

Treasury Secretary Timothy Geithner actually acknowledged this fact when he said to Paul Ryan:
“We’re not coming before you today to say, we have a definitive solution to that long-term problem. What we do know is we don’t like yours.” Thus, while the ACA looks good on paper, it is fiscally unsustainable.

During his keynote address at the Republican National Convention on August 28, Governor Chris Christie of New Jersey said:
“We must share in the pain and self-sacrifice, and any leader who tells us differently is simply not telling the truth” (7). I share his sentiments. While the Ryan-Wyden Plan may potentially increase out-of-pocket costs for future seniors, at least the two Congressmen have the courage to suggest true reform so that Medicare will continue to exist for our generation and generations to come.

Despite all the political propaganda you will hear in the coming months,
the bottom line is that we cannot afford the ACA’s propositions for Medicare. With the ACA already enacted and upheld by the Supreme Court, it is important to recognize that the bipartisan Ryan-Wyden Plan is a step in the right direction. It should be adapted into the current plan for Medicare reform because it is sustainable, cost-efficient, and realistic.

Ankur A. Shah is a BS/MD/MBA Candidate at Albany Medical College & Union Graduate College.

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