Medicare

Medicare reform and the Romney plan . . .utter nonsense

Like most, if not all, politicians, Romney has it all wrong.  His basic concept for reforming Medicare is to set the amount the government pays for each person’s coverage, turn seniors loose on the private insurance market with any difference in cost for the insurance selected a benefit or risk to the individual.  Brilliant!

Just like under PPACA the focus is not on managing health care costs, but on cutting government spending.  That solves very little for individuals.  In effect, Romney and other Republicans so adamant in opposing tax increases are doing far worse by placing Americans at additional risk for ever-increasing health care costs.

You can easily see Romney does not know what he is talking about by looking at one sentence from his website:

“These reforms will encourage insurers to lower costs and compete on the quality of their offerings”

Or how about this one:

“All insurance plans must offer coverage at least comparable to what Medicare provides today”

The politicians still control the coverage that must be offered while insurers are supposed to compete, but can’t do so by offering less costly benefit packages? 

What utter nonsense.  Exactly how does one expect insurers to lower health care costs…deny claims, tighten up on medical necessity rules so there are more patient complaints, cut the payments to providers so that they do not participate in the plans? If competition among insurers worked to control costs, if self-insured employer and union plans (covering over 70 million Americans) could control their costs, why do we still have a problem?

Keep this in mind, to control health care costs somebody has to be paid less.  That somebody is doctors, hospitals, drug and all medical device manufacturers, nurses, physical therapists, nursing homes, etc.  They must be paid less by not providing as many health care services and by not charging as much for the services they do provide.

That means you pay more and/or receive less health care…take your choice.

That is not an insurance problem, it is a system problem.

Spending on U.S. healthcare as a percentage of...

What we spend

In countries with national health care, they control costs (to some extent) by fixing budgets and accepting all the consequences and inconvenience of doing so. Doctors receive lower incomes, patients wait longer for services, and a cost benefit analysis is performed on health care procedures, they fix drug prices and more. Meanwhile in America we still think the cost of birth control pills is unaffordable and must be covered by insurance at 100%.  We are fools.

The Romney plan and others like it are nothing more than a giant cost shift to individuals with the false notion that insurance companies can somehow find a way to absorb those costs.  Don’t bet on it. 

If A – B = C where A is the cost of health care and B is what government pays and C is what you pay, if B is fixed while A increases what do you think happens to C? I failed algebra twice and even I can figure that out.

 From the Romney website:

Medicare: Medicare should not change for anyone in the program or soon to be in it.  Nor should tax hikes be part of the solution. Reforms must honor commitments to our current seniors while giving the next generation an improved program that offers the freedom to choose what their coverage under Medicare should look like:

  • Give future seniors a choice between traditional Medicare and many other healthcare plans offering at least the same benefits
  • Help seniors pay for the option they choose, with a level of support that ensures all can obtain the coverage they need; provide those with lower incomes with more generous assistance
  • Allow beneficiaries to keep the savings from less expensive options or choose to pay more for costlier plans
  • These reforms will encourage insurers to lower costs and compete on the quality of their offerings
  • Gradually raise the retirement age to reflect increases in longevity

QUESTION AND ANSWERS ON ROMNEY’S PLAN TO REFORM MEDICARE

Basic Overview:

  • Nothing changes for current seniors or those nearing retirement
  • Medicare is reformed as a premium support system, meaning that existing spending is repackaged as a fixed-amount benefit to each senior that he or she can use to purchase an insurance plan
  • All insurance plans must offer coverage at least comparable to what Medicare provides today
  • If seniors choose more expensive plans, they will have to pay the difference between the support amount and the premium price; if they choose less expensive plans, they can use any leftover support to pay other medical expenses like co-pays and deductibles
  • “Traditional” fee-for-service Medicare will be offered by the government as an insurance plan, meaning that seniors can purchase that form of coverage if they prefer it; however, if it costs the government more to provide that service than it costs private plans to offer their versions, then the premiums charged by the government will have to be higher and seniors will have to pay the difference to enroll in the traditional Medicare option
  • Lower income seniors will receive more generous support to ensure that they can afford coverage; wealthier seniors will receive less support
  • Competition among plans to provide high quality service while charging low premiums will hold costs down while also improving the quality of coverage enjoyed by seniors
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Categories: Medicare, Politics

6 replies »

  1. Pingback: Fixing Medicare |
  2. Pingback: Fixing Medicare «
  3. The big cost shift is coming, what do you think about consumer driven health care plans? Another method of shifting the risk onto the consumer or a better way for individuals to manage their care?

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