What Rep. Ryan’s Medicare Proposal Means If You’re Over 55

“Divide and Conquer” is a strategy that has served conservatives well over the years. Remind younger Americans that their elders are “greedy geezers.”  Set the middle-class against the poor, by telling tall tales about welfare queens. Pit the native-born against new immigrants.

And now, Rep. Paul Ryan’s (R-WI) plan for Medicare draws a bright line between Americans over 55 and those who have not yet reached that turning point in their lives. As I explained in an earlier post, Ryan would give folks in that younger group a voucher when they retire, send them out into the private sector to buy their own insurance, and wish them good luck keeping up with health care inflation. Those over 55, on the other hand, would be allowed to keep the federal program that guarantees their care. For once you may think, it pays to be older.

Not quite. First, the Medicare that a 56-year-old will sign up for ten years from now won’t be the Medicare that seniors enjoy today. The House Republican budget proposal would slash $30 billion from the program over 10 years. And while the Affordable Care Act strives to make sure that Medicare is shedding “waste,” not benefits, the Republican plan leaves it up to politicians and the lobbyists who counsel them to make the decisions. Good news for drug-makers, bad news for poorer seniors who can expect co-pays and deductibles to rise. Moreover, the Republican plan would repeal the Affordable Care Act, which would mean re-opening the prescription drug coverage gap (the “donut hole”).  According to Families USA, this would expose beneficiaries to up to $6,000 in additional out-of-pocket prescription drug costs by 2020.

But that’s not the worst of it. What is truly vicious is the way the plan singles out older baby-boomers (born sometime between 1946 and 1956), separating them from the herd, and preparing them for slaughter—even while seeming to favor the cohort. Keep in mind, this group is not well-liked by the generations that followed. The first wave of boomers is widely perceived as having gotten virtually everything they ever wanted: the first crack at the real estate market when housing was truly affordable; the chance to put money in an IRA at the beginning of the bull market; the opportunity to land a job at a law firm, a university, or a corporation, while there was still plenty of room at the top.  Adding insult to injury, before they grew up and grabbed all of the good jobs, they misspent their youth enjoying the illicit pleasures of the ‘Sixties’—plus Europe on $5 a day!  And now they are going to get to keep their Medicare while younger boomers—not to mention Gen X & Gen Y—foot the bill? 

No wonder they’re smiling


Baby Boomers– The First Wave, Born in 1946  Source: Flickr.com

As Paul Krugman has observed: “the supposed transition strategy under the Ryan plan in which everyone currently over 55 gets Medicare as we know it, while everyone younger than that gets vouchers that won’t be enough to buy adequate insurance, sets up an unstable political dynamic.”  To say the least.

Krugman provides a link to Matt Ygleisas’ ThinkProgress where Yglesias paints a grim picture of the future: “You’ll have an ever-growing pool of people born after 1956 who’ve been told that they’ll never benefit from Medicare no matter what happens, but who are being asked to pay the taxes that finance it. . . You’ll also have a declining set of people born before 1956” trying to defend “their” Medicare. 

 In that Darwinian contest, who do you think is going to win? Those who were “lucky” enough to hold onto Medicare can count on watching the program shrivel just when they need it most.

Today, Merrill Goozner offered his generation some wise advice: “I’m over 55. In theory, I don’t have to worry about Paul Ryan’s plan. But here’s my message to my cohort: We can hang together, or we can hang separately.” The only way to combat “divide and conquer” is with solidarity. Everyone over 55 should get behind those under 55 and send one message to Washington: Every senior needs and deserves Medicare.

17 thoughts on “What Rep. Ryan’s Medicare Proposal Means If You’re Over 55

  1. Maggie-
    You are on a “MEDICARE protection roll”- just at the right time.
    I will help by directing people to your blog.
    Dr. Rick Lippin

  2. A couple of points:
    1. Just think of the fun when you have a now 56 year old male and his 54 year old spouse willhave when she is ready for Medicare. 1 under one plan and the other on Von Ryans Plan.
    2. People forget a few years back Congress had to sterp in and limit the options available to citizens with Medicare, because insurance companies were exploting them, some people had 4 or 5 different plans. Just think of the options available in the future.

  3. I am 55 and nothing changes for me. This blog reads like a communist manifesto. Let’s deal with the facts. Funny there is no mention of the cost efficiencies of Medicare part d, which FYI is well below budget. The election upcoming will arbitrate who has proposed a viable solution, and who hasn’t.

  4. Rick, Donald, Hoyt,
    Thanks very much. I think everyone should be concerned about Medicare, whether they are on it, their parents or on it, or they have been putting money in for years, and are counting on Medicare as a safety net when they are older.
    This seems to me a cause that could unite many of us.
    No doubt this plan would create chaos.
    It’s also very likely that private sector insurers would step in and offer to insure healthy (and relatively wealthy) beneficiaries still on traditional Medicare (they would have the option of going into the private sector if they chose.)
    This would mean that the pool of older boomers on traditional Medicare would be sicker than average–putting more financial pressure on the program.
    (Of course when those older boomers who had switched to private insurance became sick, chances are private insurers would bounce them or jack up their premiums to a point where they were not affordable. And there would be no Affordable Care Act to protect them.
    At that point would they be able to go back to traditional Medicare (further draining the program by adding more sick people to an already skewed pool) or would they just become 75-year-old
    uninsured Americans? I don’t know.
    The Communist Manifesto?
    Why do I have a feelilng you’ve never read it?
    Comparing this post to the Communist Manifesto is like comparing it to the latest hit on the Country-Western list. No resemblance in terms of style, content or intent.
    As for Part D: of course it’s expensive. In the U.S we overpay for drugs while drug makers reap enormous profits.
    In a recent post, I quoted Ted Shannon a health care analyst and hedge fund manager (hardly a Communist).
    Speaking at a recent conference, he said:
    “The average S&P company returns 12 cents for every dollar of investment, and that’s good. For companies that spend a lot on R& D the return is actually closer to 18 percent—and that’s really good. For pharmaceutical and Medtech, it’s like 35 percent to 40 percent—depending on the company. Is Pfizer really that much more innovative than Boeing?” he asks.
    In recent years, “the number of new medical products that have been brought forward for FDA approval has fallen by 2/3” Shannon points out. At the same time, “the number of ‘supplemental products’ has doubled. So basically we’re making incremental little improvements to products that have been around for ten years.” Meanwhile drug-makers and device-makers are “telling Mr. Hospital Executive that they expect a 30% premium, because it’s new.”
    “You all have been sold a bill of goods,” Shannon told his audience. “No question, R& D is expensive, and no question it’s time consuming.” But “the returns these companies have enjoyed—largely because of their profitability in the United States—have come out of the hides of the people in this room.”

  5. Maggie –
    I think it’s important to note that the commission appointed by President Clinton in 1999 co-chaired by then LA Senator, John Breaux and CA Representative, Bill Thomas won yes votes from 10 of its 17 members for the premium support concept, one short of the number to move it forward but a clear majority nonetheless. It envisioned combining Parts A and B (there was no Part D then) and having beneficiaries pay 12% of the program cost in beneficiary premiums which would produce about the same revenue as the was generated from the Part B premiums that already existed. Government would pay the rest in the form of a defined contribution (voucher if you like) with additional subsidies to help the lowest income seniors cover their share of the premium.
    The problem with standard Medicare as it exists now is that it’s unsustainable and the IPAB, even if there were no political opposition too it, has too many limitations placed on it. If it had the power to go after hospitals, where much of the waste in the current system takes place, and to refuse to cover and pay for services, tests, procedures and drugs that either don’t work or cost more than they’re worth, I would be more optimistic. Unfortunately, that’s not the case.

  6. Barry,
    Many thanks for knowing that I haven’t read a document that I have read. Your clairvoyance is a little off.
    The US is a land of opportunity and wealth building, not regulation and wealth redistribution or class warfare -hence the correlation to the communist manifesto and the proletariat vs. the bourgeous class. The point is that profitability is determined by what the market will tolerate. When you include r&d, along with tort protection, the pharmaceuticals have to build that in. Now, why don’t you compare the profit margins of Microsoft, Google
    etc. to Johnson and Johnson or Merke or Phizer. By your logic, we should regulate software sales. Lastly, pharmacy is only about 15% of total healthcare spend.
    The point here is that the US was built on the land of opportunity, not the land of medicrity. So controlling profits belongs in Europe or China or Russia. not the US. You’ll find this to come to fruition when the Dems lose the Senate and maybe the White House.
    I am a big fan of opening up markets, but the liberals want no part of it. Why not allow foreign drug imports. Although they regulate costs, generics actually sell for less in the US.
    Per medicare, nothing happens for 10 years. So the panic mode is completely disengenuous and pathetic scare tactic.
    Say good bye to ObamaCare after 2012. It’s history.
    Cheers, Hoyt

  7. Well Hoyt, if you’re such as student of political and economic history you’ll know that the US had some of its best times when the rich-poor gap was much narrower, top tax rates were much higher and unions were large and strong.
    You’ll know too that the US has some of the world’s strongest anti-trust laws and business regulation and sanctions.
    You’ll also know that the Communist Manifesto predicted much of the awful problems that unfettered capitalism causes.

  8. Important potential happenings in Vermont on the single payer competitive front. See:
    Now if the provider flight issue from the state can be prevented/overcome, and if reasonable access can be made available for all, then this could show the nation (not the conservatives but the population majority) what could be done by such a system. At least it gives it a chance to be tried!! If it becomes an unquestionable success, then all will have to follow if there is any logic in this country!

  9. I hadn’t heard about this and since I fall directly into the targeted age group I need to learn more about this, particularly so I can make education decisions going forward.
    On a lighter note, that school class photo made me smile. That is exactly what my class pictures looked like, too.
    Thanks for keeping us informed on these important issues, Maggie.
    Tayna Waegner
    Webmaster, Venapro Blog

  10. Barry–
    You are mistaken about hospitals being exempted from cuts. IPAB won’t be reducing payments to hospitals because as I explain in my recent post on IPAB, the ACA is already forcing hospitals to reduce waste by cutting annual updates:
    “The law prohibits IPAB from making recommendations affecting certain providers, including hospitals anytime before 2020. Hospitals are exempted, along with nursing homes, and hospices because, as Washington & Lee health law expert Timothy Jost explains, “they already are singled out by the ACA for extraordinary cuts.” (As noted above, annual increases (i.e. inflation updates)in Medicare reimbursements to these institutions will be cut by 1% a year for 10 years, part of an effort to motivate these institutions to reduce their costs by doing a better job of avoiding errors and coordinating care. MedPAC research shows that when hospitals are under some financial pressure, they can and do cut waste”
    1 percent a year for 10 years–compounded. This is a sizable amount of money, and this will force hospitals to become more efficient (or go under.)
    In addition, under the ACA Medicare will no longer be paying for preventable readmissions. And finally, payments to hospitals with the highest rates of infections and errors will find their Medicare reimbursements automatically cut.
    It’s quite certain that, as a result some hospitals won’t be able to make it financially, and will close. WE have more hospital beds than we need in this country; if the total number is reduced, we’ll have fewer unnecessary hospitalizations (since we know supply creates demand.) Meanwhile, the hospital ERs will be replaced by community health clinics (under the ACA we’re doubling their capacity) which are open after-hours and can provide much less expensive, better care to people who now get much of their care in an ER.
    So we are going to see reimbursements to hospitals level off, and quite possibly they will fall.
    In addition, the Secretary of HHS will be able to lower fees for “overvalued services” (without needing permission from Congress.)
    We can be fairly certain that fees for some surgeries (back surgery for certain patients , some heart procedures for certain patients, some of the most expensive and unproven treatments for prostate cancer) will be lowered. We know, from past experience, when you reduce fees, volume levels off. This is another reason reimbursements to hospitals will fall–some surgeons won’t be doing as many particularly expensive surgeries. Finally if Medicare lowers reimbursements for drugs (and begins negotiating with drug companies as the president has indicated) then payments for some very expensive cancer drugs –as well as other drugs– will fall. Many of those drugs are administered in hospitals and show up on hospital bills. This is another reason hospital reimbursements will fall.
    On the idea of turning Medicare into a defined contribution program– it really doesn’t matter how 10 people voted in 1999.
    You’ll never get a majority in Congress to vote for it.
    Anyone who thinks that a 75-year-old who is suffering from some memory loss is in a good position to pick out and buy his or her own health care just isn’t thinking.
    We know what defined contribution has done to retirement savings . . Just as most people are not well-suited to being their own money-managers, most seniors do not have the knowledge to become their own human resource specialists. Nor do they have any leverage to speak of in the marketplace. Private insurers will simply charge them whatever they choose–unlike Medicare, they won’t have the clout to push back.
    And most seniors are not in a position to read insurance plans and figure out what they do and don’t cover.
    For instance, some insurance plans have a 5,000 annual cap on outpatient procedures.
    That may not sound so bad–until you find out that surgery to have a pacemaker put in counts as “outpatient surgery.”
    A friend is now facing tens of thousands of dollars in medical bills because he didn’t know this.
    It was an emergency procedure, but his doctor told him “you can go home and sleep at home tonight, then come to the ER at 7 tomorrow morning.”
    So he did just that. Because he hadn’t spent the night in the hospital, he wasn’t considered an inpatient.
    (He is a very bright man, well-educated, and has gone to the doctor, the hospital and the insurance company about this. It appears he is stuck–unless he sues. And even then, it’s not at all clear that he would win.

  11. Hoyt–
    You write: “The U.S. is a land of . . . ”
    Anyone who tries to complete that sentence ignores the fact that, over decades, the U.S. has undergone enormous changes.
    The 1930s was a time of income re-distribution and regulation.And the effects of that income re-distribution lasted well into the 50s, when, as Marc points out “when the rich-poor gap was much narrower, top tax rates were much higher and unions were large and strong.”
    And the economy was in much better shape than it is now.
    Recently, the pendulum has swung in the other direction as the gaps between the working class the middle class and the rich have widened, tax rates for the rich have fallen and much wealth has been consolidated at the top of the wealth and income ladder.
    As a result, we’re ready for yet another pendulum swing– more regulation, higher taxation, more social safety nets, and income re-distribution.
    This is why health care reform legislation finally passed–and is now the law of the land.
    Despite the poor economy, it looks very likely that President Obama will be re-elected. Despite high unemployment, he remains surprisingly popular –and the Republicans really don’t seem to have a viable candidate to run against him. Unless they surprise everyone and pull a rabbit out of a hat, the election is his.
    Finally when you try to define the U.S. (The U.S. is a land of) you ignore the diversity of the country. As Walt Whitman wrote long ago, this country “contains multitudes.”
    And these days, that diversity is increasing. For centuries, whites have been in the majority; before long, that will no longer be true. For centuries, white men held most of the power. But a few years ago, a woman was nearly elected president.
    And people like Nancy Pelosi, Elizabeth Warren and Kathleen Sebelius are showing that women can step up and take control, even in the face of great male anger.
    Given demographic changes and a shift in power it’s not hard to predict that 20 years or 30 from now, this country will be quite different.

  12. Marc, NG
    Thanks for your response to Hoyt. And you are right, Marx did predict that monopoly capital would lead to the destruction of unfettered capitalism. The concentration of wealth and power at the top undermines both the society and the economy.
    I don’t quite see what your comment has to do with the topic at hand.
    Secondly, I did go to the link you included. As the article makes clear, Vermont is Not experimenting with a single payer plan. It is
    talking about a public option that would exist side by side with private insurance plans.
    The writer of the article tries to call it
    a “single-payer hybrid” but in fact it is a “public option” something that Congress also has talked about and that is very different from a single payer system.
    I’m bothered by the way single-payer advocates always have to exaggerate–it undermines their credibility.

  13. Maggie,
    My point is that no pure single payer plan, which I do support, will be given a chance in the current political environment. However if hybrid competition or anything else resembling a large public single payer like plan can be given a chance somewhere, then everyone will have to pay attention to the results. If they are great, then the political environment toward single payer like plans could change!
    I only hope that a single payer like plan in a small state like Vermont can show some success even though everyone will not be involved, which is the real key to single payer success nationally!

  14. NG–
    I support a public option which is what Vermont is exploring and is very, very different from single-payer which, as the phrase suggests, means “no other options–one payer.”
    I’m not going to go into the differences here. I have explained before, and this post is not about single-payer (or public options.)

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