Tuesday, April 05, 2011


The Republican budget proposal includes the major changes in Medicare:

a) Medicare: Privatizes Medicare. Future beneficiaries will choose from a menu of private options. They won’t have the choice of the standard Medicare plan. Wealthier beneficiaries will get a small voucher and poorer beneficiaries will get a larger voucher. Vouchers grow at GDP+1%, whether or not Medicare does the same.

The importance of this cannot be stressed enough. The Republicans are proposing means-testing, combined with a denial of the current standard Medicare plan. What they are offering is less coverage. And that smaller coverage is to be picked by the elderly from a long list of most likely confusing alternatives.

Note also the stipulated growth rate in the vouchers. Medical care costs have risen faster than the general rate of inflation for decades and nothing suggests that this wouldn't continue. All this means that the coverage Ryan offers will not only start smaller but will get even smaller at a rapid rate.

Past attempts to do something of this sort with health maintenance organizations and Medicare recipients were not successful. The elderly are the most expensive patients of all, for obvious reasons, and the average size of those vouchers would have to reflect that. Would it? Given those other rules in the Republican budget, I doubt it.

Turning the current Medicare system into vouchers would not be quite the same as total privatization, because even the current system uses private health care organizations to deliver the care. What it would do, though, are potentially two things:

1. It would make the total removal of government funding easier: Just make the vouchers disappear over time!, and

2. It would probably remove the ability of the government to hold down medical care costs by its gigantic-buyer market power.

This is so bad. It ultimately leaves elderly people on their own, struggling with various options, trying to balance medications and food and having to accept extra suffering.