Bursting with the policymaking power that control of both houses of Congress and the White House gives Republicans, House Speaker Paul D. Ryan (R-Wis.) has lost no time in teeing up a favorite goal: gutting Medicare.
In an interview with Fox News Channel only days after the election, Ryan said: “Obamacare rewrote Medicare … so if you’re going to repeal and replace Obamacare, you have to address those issues as well. … What people don’t realize is that Medicare is going broke, that Medicare is going to have price controls. … So you have to deal with those issues if you’re going to repeal and replace Obamacare. Medicare has got some serious problems because of Obamacare. Those things are part of our plan to replace Obamacare.”
There’s no secret about what specifically Ryan has in mind. He intends to replace traditional Medicare, an efficient program offering guaranteed treatment and featuring rock-bottom administrative costs, with a privatized program. Seniors would get a federal voucher to help them pay premiums charged by commercial insurance plans. Ryan calls this system “premium support.”
Medicare has got some serious problems because of Obamacare.
But since the value of the vouchers would rise at less than the rate of healthcare inflation, and the costs of private insurance typically rise faster than those of Medicare, an ever-larger share of healthcare costs would land on seniors’ shoulders. In 2011, when Ryan first proposed this change, the Kaiser Family Foundation calculated that by 2022, healthcare spending would consume roughly half of the typical 65-year-old’s Social Security check, compared to only 22% under the existing Medicare system.
Ryan’s plan would do nothing to rein in healthcare costs, but would likely increase them, in part because Medicare beneficiaries would be saddled with paying not only for their care, but for the shareholder dividends and executive pay of private insurance companies. The savings Ryan touts would be illusory: They would merely be shifted from government to seniors.
His plan threatens to increase seniors’ costs in another way: by severing the link between the reimbursements paid to doctors and hospitals by traditional Medicare rates and those paid by Medicare Advantage plans, which are semi-privatized plans that offer enrollees more services but narrower provider networks.
Medicare Advantage is growing in popularity, with an estimated 31% of all Medicare beneficiaries enrolled. But those private insurance plans’ reimbursement rates are benchmarked to traditional Medicare rates, which are set by the government. Ryan has proposed removing the benchmark and allowing Advantage reimbursements to be set by competition. As healthcare commentator Andrew Sprung observes, “that would likely lift the lid on the payments insurers make to healthcare providers —– and then, as costs rise, shift an ever-rising share of them to seniors.”
It’s unclear whether Ryan’s ideas will pass muster with President-elect Donald Trump, who promised during his campaign not to cut Medicare or Social Security and may see political dangers in backtracking. There’s no telling whether Trump will stand fast or even if he’ll sufficiently understand the nuances of Medicare financing to spot Ryan’s fiscal legerdemain. His presidential website mentions the intention to “modernize Medicare” but doesn’t say how.
Ryan, moreover, has surrounded his Medicare proposal with a bodyguard of lies. In his Fox News appearance, he said Medicare is “going broke” and ascribed its problems to the Affordable Care Act. Neither assertion is true.
Medicare faces fiscal problems, but it’s not going broke, and according to both the Medicare trustees and the Congressional Budget Office, the Affordable Care Act has in fact alleviated those problems rather than caused them. The trustees reported in 2010 that passage of Obamacare had postponed the projected exhaustion date of the Medicare trust fund by 12 years — to 2029 from 2017. Projections of Medicare spending growth have consistently come down, year after year, at least in part due to changes in the program imposed through Obamacare.
The program’s fiscal situation would be “substantially improved,” the trustees said, because the ACA instituted new cost controls and provided new tax revenues for the program. Both those features would disappear if the GOP repeals the ACA, as is its intention.
Also at risk as a result of repeal would be an ACA provision plugging the Medicare prescription drug “donut hole,” which exposes seniors to a sudden jump in out-of-pocket drug expenses once they’ve exceeded a certain level of benefits. The ACA would close the donut hole by 2020; Ryan is silent on whether, or how, his proposal would manage that hit.
In his Fox News interview, Ryan also took aim at the Independent Payment Advisory Board, or IPAB. This body, created by the ACA, is empowered to recommend changes in Medicare reimbursement rates for doctors and hospitals if the program’s projected growth exceeds a target rate. IPAB hasn’t actually been created yet, but that’s not much of a problem because the Medicare growth rate has been well within bounds.
IPAB has been a major target of conservative ACA critics from the start, for reasons that have never been very clear. The board has no authority to recommend changes in benefits, enrollee costs or anything other than what doctors and hospitals get paid. Ryan wrung his hands on Fox about this board’s ability to impose “price controls on Medicare,” but he forgot to mention that it’s empowered to step in only once all other efforts to control costs have failed.
The ACA includes all sorts of cost-control provisions aimed at how physicians bill patients and how hospitals manage their treatments, some of which already have yielded evident improvements in how American healthcare is delivered. Ryan’s Medicare plan offers no alternatives to these ideas, other than airy promises to “strengthen … health and retirement security” for seniors and to “foster a more patient-centered system,” a GOP shibboleth with no discernible meaning.
Ryan’s lies and insinuations have been abetted by ill-informed and supine press coverage. In 2011, for instance, the fact-checking outfit Politifact labeled as “the lie of the year” the accusation that Ryan and his fellow Republicans had “voted to end Medicare.”
This was a remarkably ignorant finding, contradicted by Politifact’s own description of the Republican plan. Politifact acknowledged that for anyone then younger than 55, the vote “dramatically changed the program … by privatizing it and providing government subsidies.” It takes a surfeit of obtuseness not to notice that privatizing a government program is tantamount to killing it, and bifurcating it into separate pools of young workers and people 55 and older is a formula for fiscal chaos and, eventually, annihilation. It takes a surfeit of obtuseness not to understand how a voucher program works to increase costs on beneficiaries.
Ryan’s assault on Medicare, like other policies likely to be advanced by Republicans in the next few years, will place a premium on informed journalism, as well as concentrated organizing by defenders of programs that have been working very well for Americans and that need improvement, not evisceration. Medicare advocates beat down Ryan’s initial sally against the program in 2011, but they need to remain vigilant. And unlike Politifact, reporters and editors covering these programs will need to know what they’re talking about. The challenge is on.
11:55 a.m., Nov. 23: This article has been updated with further details of Paul Ryan’s Medicare proposals.
This story was first published at 10:10 a.m. Nov. 14.