Fortitudine et Prudentia

Medicare – Ryan’s Vouchercare & Why You Should Care

In News and Opinion on August 16, 2012 at 12:09 am

If you’re an American and you’re planning on living until you’re 65 then this election is very important to you.

For the eternal optimists among us retirement is something far off into the future that we don’t consider daily but as sure as birthdays add up retirement is coming and with retirement comes healthcare needs. Coverage for doctor visits, hospital stays, prescription drugs, medical devices, and therapy is not cheap. In 2010 The Center for Medicare and Medicaid Services estimated it costs the government $11,743 per enrollee for annual coverage in Medicare. That covers Jazzy scooters, home health aides, and enough prescription drugs to fill a fisherman’s tackle box for all of America’s retired population.

Currently Medicare is funded by the tax payers who aren’t retired yet. Tax payers pay into the system until they retire then when they retire the younger tax payers pay for the Senior’s coverage. Taxpayers pay a whopping 1.45% of their income toward Medicare that their employers match dollar for dollar. That should be spelled out to dispel any notion of a typo – Medicare is taxed at one point four five percent of income.

For retirees Medicare is not a free ride. Currently there are monthly premiums for Doctor and prescription drug coverage but overall retired citizens are very happy with their Medicare and the system as whole. As a matter of fact they are happier with their healthcare coverage than people with employer based insurance.

It’s a good deal. Pay a measly 1.45% of your income during your working years and retire secure with great insurance you are most definitely going to need.

But there’s an onion – Medicare is going broke.

But Medicare has always been going broke. According to Patricia A Davis of the prestigious Congressional Research Service the current solvency projection of Medicare extends until 2024 which is in line with the average insolvency projections of 11.8 years historically.

This isn’t Medicare’s first rodeo with solvency. Just like any other health insurance coverage, public or private, if changes aren’t made the solvency outlook deteriorates. Healthcare companies raise premiums and change copayments as needed to stay solvent but not Medicare. Medicare slogs along like a dinosaur and this static notion of Medicare as not being adaptable leaves it open to the unfounded hysteria of inevitable extinction. Medicare is perceived as a lumbering dinosaur slogging its way off of a cliff because our government mismanages it.

Paul Ryan, now the Republican Vice Presidential nominee, is the latest opportunist to pull the proverbial fire alarm. Mr. Ryan came up with a plan to “fix” Medicare in 2010 as part of his budget entitled The Path to Prosperity. Nice name. Ryan didn’t want to fix Medicare like they do in the private sector or like as was done under Ronald Reagan’s Presidency; Ryan decided the best course of action is to hand over – the most popular and successful government program ever – to the private sector. His current boss, Mitt Romney, said he would sign Ryan’s plan into law if he became the President.

The Path to Prosperity has already passed through The House of Representatives and would surely be passed through budget reconciliation if Republicans get the majority after this election then it would be on Mr. Romney’s desk for his guaranteed signature by Spring 2013.

For a man who claims to be an “actuary wonk”, Ryan’s numbers get scary – very scary – if you plan on retiring. Under Ryan’s Plan ten years from now Medicare turns into “Vouchercare”, a system that issues American retirees coupons they can use toward the purchase of health coverage that’s similar to employer based coverage. The out of pocket costs for senior citizens would sky rocket according to the Congressional Budget Office. In 2012 the current out of pocket expense for seniors is 25% with traditional Medicare under Ryan’s “Vouchercare” the cost for seniors would rise to 68% or roughly $6,200 per year. That should be spelled out – six thousand two hundred dollars per year senior citizens would have to pay out of pocket under Ryan’s plan.

Ryan’s Medicare plan puts an unconscionable extra $400 per month expense on all retried American citizens – If you’re under the age of 55 today that means YOU and if you’re over the age of 55 today that means your children and grandchildren.

And there are unknowns with Ryan’s plan too. It’s not clear what happens to the Seniors who will not be able to afford the extra premium. Do the indigent seniors get dropped from their coverage or do they get forced into bankruptcy, nobody knows. Then there’s the question of what will be the minimum standard of coverage if Medicare gets handed over the insurance companies? What will be covered and what won’t be covered? What about Doctor and Hospital choice? Currently Medicare is accepted by most Doctors and Hospitals. Can a 93 year old navigate an HMO effectively?

There are many things that can be done rather than handing over Medicare to the insurance industry. Taxes can be raised 0.5%, the retirement age can be increased, coinsurances and deductibles can be raised, fraud, waste and abuse can be cracked down on. The practical options are almost endless. What shouldn’t be an option is giving seniors a voucher and wishing them good luck during what should be their best years of life.

-Ray Reilly

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