http://factcheck.org/2012/08/a-campaign ... mediscare/Would seniors pay more? Ryan’s old plan limited the rise in premium-support payments to the rate of inflation. An analysis from the Congressional Budget Office indicated that plan would have led to seniors paying about $6,000 more for a private plan than they would on traditional Medicare, which was not an option under the old plan. But the new plan, by tying the subsidies to GDP plus 0.5 percentage points, is more generous.
Nevertheless, it’s still possible that out-of-pocket costs would rise for seniors under the Romney-Ryan plan. CBO said that “beneficiaries might face higher costs.” But it didn’t attempt to estimate how much; CBO said there was a lot of uncertainty.
CBO also said that either the Ryan plan, or the current law under Obama, could lead to reduced care for seniors. CBO said of current law:
CBO, March 20, 2012: The [current law's] restraints on Medicare spending could lead to reduced access to health care; diminished quality of care for Medicare beneficiaries; greater efficiency of health care delivery; less investment in new, high-cost technologies; or some combination of those outcomes. CBO does not have the capability at this time to estimate effects of that sort.
As for Ryan’s plan, CBO said possible consequences could include the same effects, except that they would be “a great deal stronger” than under current law because Ryan would hold down overall spending more aggressively. Ryan’s plan also would increase the age of eligibility for Medicare slowly to age 67 by 2034. It is currently age 65.
We’ve heard Democrats and Obama argue that the premium-support system would eventually lead to the end of traditional Medicare, as younger and healthier seniors picked private plans and older, sicker seniors stuck with the traditional system. That could be one outcome. But the Romney-Ryan plan includes risk-adjustment measures that would fine insurance plans that have more healthy beneficiaries and pay plans that cover more sick seniors. Critics of the Ryan approach say the risk adjustment won’t function properly, but that’s a prediction that may or may not come to pass. It’s an opinion, not a fact.
And there’s reason to think Ryan’s approach could deliver coverage at lower costs — to both seniors and taxpayers — than traditional Medicare.
Three Harvard researchers recently concluded that private insurance companies already are offering plans to cover seniors at lower costs than traditional Medicare. They studied four years of data from the Medicare Advantage program, in which private insurers bid to cover seniors with government-subsidized private insurance.
What the Harvard researchers found is that nationally the second-lowest bid from private insurers was an average 9 percent lower than the cost of traditional Medicare.
Their study was published in the Journal of the American Medical Association‘s Aug. 1 issue. They conceded that one explanation for this might be that private plans had managed to attract younger, healthier seniors who are less expensive to cover. But they noted that another explanation might be simply that “they may use medical resources more efficiently.”
JAMA authors, Aug 1: To the extent that the 9% cost advantage reflects efficiency, it suggests there are better ways to provide the traditional Medicare benefit. Indeed, if plans are bidding above their cost of insuring beneficiaries, the 9% gap may underestimate the full efficiency gain.
However, the authors also noted that the Affordable Care Act would likely have an impact on these estimates through its Medicare spending reductions and new payment measures. And “if the ACA reduces traditional Medicare costs enough so that traditional Medicare becomes the benchmark, beneficiaries would no longer pay more to keep traditional Medicare; instead, MA plans would be costlier than traditional Medicare and require a premium.”
Overall, the authors said that Ryan’s premium-support plan would be “less risky” if the federal health care law was successful in lowering costs. “Premium support, based on competitive bidding, may offer a fiscal solution if ACA reforms fail, but at the cost of making Medicare beneficiaries responsible for solving Medicare’s fiscal crisis. Success of the ACA can make premium support less risky by lowering traditional Medicare costs and helping to monitor and improve quality in private plans,” the authors concluded.
We don’t see conclusive evidence that Ryan’s market-based approach will work either better or worse than Obama’s regulation-based system, or that either will work at all. But the claim that the Republican approach would “end Medicare” is blatantly false, and the claim that it would lead to higher costs for seniors is possible, but unproven.
Claim: We’re the ones saving Medicare.
Romney campaign ad: Mitt Romney and Paul Ryan will strengthen Medicare and protect the commitments made to current seniors.
Obama, Aug. 15: I’ve strengthened Medicare. … I’ve proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system.
These boasts about saving Medicare are simply opinion. Each side says it has the right plan, while the other side is going about it all wrong — though voters would be hard-pressed to figure out what exactly those plans are from campaign ads and stump speeches.
The Obama approach is to stay with government-provided traditional Medicare while putting pressure on health care providers to deliver care more efficiently, and instituting new payment models and coordination of care to cut costs. The Romney-Ryan plan turns to competition among insurance companies to lower costs and premium-support payments to induce seniors to pick their health plans based on price.
The commonality for the campaigns is: “We promised too much in Medicare; we need to reduce costs,” says Walker. “What’s the best way to do that?”
“It really is, which way do you think you have a better shot,” Wilenksy says. And, she says, it’s a good debate to have.
So far, though, we’re not having that debate on the campaign trail. “It’s very interesting trying to get any credible information with all the smoke being blown,” Wilensky says, “which is too bad because these are very serious issues.”
– by Lori Robertson
With regards to the paragraph highlighted in bold, here's the question to the forum.
Which method do you think will work better? Government pressure to reduce the fat by cutting medicare payments, competition amongst companies to reduce costs by chasing for customers.
