AS CONGRESS DEBATES how to move forward with a 2012 budget, what may be the biggest and most objectionable part of Budget Committee Chair Paul Ryan’s (R-WI) plan seems not to be getting much media coverage: privatizing Medicare.
Of all the objectionable aspects of his proposed budget — and there are many — this one will probably cause the most harm to American workers under 55.
As Rep. Chris Van Hollen (D-8th MD) says, “It doesn’t reform Medicare. It deforms and dismantles it.”
Ryan’s plan calls for turning Medicare from a single-payer medical care plan for seniors into a voucher program. Instead of using the Medicare tax to pay directly for health care, the money would be used to pay for vouchers, which seniors could then use to purchase private health care insurance.
The problem is that as health care costs rise, the value of those vouchers will stay the same. Studies have shown that this approach would rapidly reduce the ability of seniors to get the medical care they need.
The Center for Economic and Policy Research (CEPR) estimates [1] that by 2030 half of retirees over 65 would need to pay 44 percent or more of their retirement income for Medicare. By 2050, half of retirees would be paying more than two-thirds of their income for health care.
In other words, tens of millions of retirees will be unable to afford adequate medical care.
Congress should fix Medicare, not privatize It
ANYONE WHO IS on Medicare or who cares for a relative on Medicare will tell you that right now this benefit provides a high level of care for very little out-of-pocket money from beneficiaries. Funded by a 2.9 percent payroll tax (half paid by the employer, half by the employee), it allows beneficiaries to choose their own doctors and health care providers. Medicare foots the bill.
Medicare spreads the cost of providing health care coverage to seniors over the entire population of wage-earning taxpayers, much like an enormous group health care plan. But it has an advantage private health care doesn’t. Because it does not need to generate profits, administrative costs are kept low. When compared to a privatized alternative — Medicare Advantage (enacted under the Bush Administration) — Medicare costs 17 percent less, on average, for the same benefits.
But even the cost-sharing advantage can’t change the fact that health care costs are rising. As a result, Congress needs to either increase funding for Medicare, decrease costs, or a combination of the two. Last year’s health care reform act did both, raising Medicare taxes for the rich (beginning in 2013) and ending the 17 percent subsidy the federal government has been paying private insurers who provide Medicare Advantage.
Admittedly, more is needed. But Ryan’s approach is totally wrong, critics say. By privatizing Medicare, Ryan’s proposal shifts the burden of rising costs to retirees — the people who can least afford to pay the increases.
By 2030, about 78 million people are projected to be on Medicare. If half of them are unable to purchase health care insurance because of Ryan’s proposal, 36 million seniors will not get appropriate treatment for their medical conditions.
Opponents of Ryan’s proposal say prolonged illnesses and premature deaths will result — and literally millions of lives will be at stake.
