Ezra Klein says that Mitt Romney's plan for Medicare—essentially, Paul Ryan's plan to end it and cut people checks, but now with a newly invented ability to use those checks to opt back
into the traditional system in some manner (it's unclear just how much the checks will or won't cover, since none of those numbers have yet been specified)—has perhaps some
unintentional side effects:
[I]t could, for Republicans, lead in an awkward direction. If Romney is elected and he manages to pass his plan and repeal the Affordable Care Act, the pressure to open the revamped, semi-privatized Medicare program up to younger and younger Americans will be immense. Romney forswears any intention of doing anything like this, of course. His plan actually calls for raising the Medicare retirement age. But with 50 million Americans uninsured and cost growth in private insurance options routinely outpacing cost growth in the Medicare program, something will eventually need to be done for the rest of the country. And Medicare will now look a lot like what Democrats originally wanted the Affordable Care Act to look like. Plus, it will have the GOP's stamp of approval on it, and there will be no questions about its constitutional legitimacy.
Hmm. Color me skeptical on this one: I think Republicans will find it rather easy to resist opening up Medicare to more Americans, just as they have been all along. I don't see semi-privatization as being an avenue toward future expansion of the program, but it's fairly easy to see it as an avenue toward ending the program entirely.
Here's the difficulty I have:
That's always been the great secret of the Ryan plan. In proposing that we could dramatically cut costs simply by forcing seniors to choose private options on competitive exchanges, it affirmed one of the ACA's central efforts at cost containment. Bowing to the unpopularity of that plan, Romney has now backed up to proposing we could dramatically cut costs by forcing seniors to choose between public and private insurance options on competitive exchanges -- an even more liberal approach to cost containment.
See, I don't think the Ryan plan was ever a serious proposal to cut health care costs for seniors. It was a plan for transferring more health care costs onto seniors, yes, but all the suppositions that this would somehow result in lower total medical costs were presumed either as general free-market hand-waving or, more plausibly, under the assumption that seniors who could not afford their medical care would simply go without it. That self-rationing would probably reduce overall health care bills as elderly Americans, well, died sooner, but the Ryan plan was specifically about making sure the government paid less for health care. It didn't address how that would magically translate into the free market fairies not gouging seniors.
It was always presumed, though never spoken, that private companies would be providing less health care per dollar than the current government provides. Medicare is, compared to private insurance, more efficiently administered (yes, government can do certain things right) and, after all, that's how you achieve "cost containment", especially in a for-profit system: you avoid paying money back out.
Romney is all for privatization or semi-privatization, but took an essential lesson from the Ryan proposal. Namely, that people hated it. Oh, how they hated it. So the Romney proposal is a sop to all those who specifically do not want their Medicare put in the hands of private companies. We'll keep the old system intact for everyone who might prefer that.
But will the cost remain the same? Will those government checks cover that cost, or will Medicare be a "premium" option? Surely, there would need to be some incentive for seniors to choose the more complex privatized option, and heaven knows private companies won't be providing better services. The only way for Romney's plan to work is if seniors have a financial incentive to choose the private option over Medicare.
That, in turn, leads to the age-old problem of selection. If healthier seniors want to save a few bucks by choosing a private insurance option that provides significantly crappier services, but for a reduced fee, then the government program will be filled primarily with sicker, more expensive individuals. (Seniors could, for example, choose a private option until they really needed some bit of care that the private companies refused, then go back to Medicare, presumably without penalty.) There will also be a great number of seniors who simply will not be able to get any private health insurance, regardless of cost, because of preexisting conditions. For them, Medicare will remain the only option.
Suddenly, then, the Medicare numbers in future years start looking much worse. Look how much money we're losing! It's a total failure—clearly, this is evidence that the private sector needs to be put in charge of all of the rest of those seniors, too!
Medicare privatization is predicated on the notion of out of sight, out of mind. If we can cut Americans a check, after promising them a certain level of care in exchange for their tax dollars, then we can wash our hands of them: whether they get adequate care on the open market is no longer a government concern. Yes, it would probably lead to increased poverty, decreased ability to pay for care, premature death and the like, but hey: free market, suckers.
It is far easier to envision that future than it is to imagine a scenario in which Republicans, smarting from the fact that their privatized solution is hemorrhaging money and primarily collecting the sickest and most uninsurable Americans, suddenly reverse their positions and open the program up to more of the population. The goal here is simply an ideological one to privatize another essential government function, with the added bonus of turning it into a for-profit center for Wall Street and the insurance companies. Whether it would actually work out in practice is, as with previous attempts to privatize Social Security, not a consideration.
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