Zunguzungu: Why Arianna Huffington is Bill Keller’s Somali Pirate
Liveblogging World War II: April 5, 1941

Democracy in America: Republican Paul Ryan's Repeal of Medicare Is "Fundamentally Immoral"

The Economist weighs in against the Republican plan for Medicare.

MS:

Medicare reform: You put the load right on me | The Economist: Mr Ryan's plan ends the guarantee that all American seniors will have health insurance. The Medicare system we've had in place for the past 45 years promises that once you reach 65, you will be covered by a government-financed health-insurance plan. Mr Ryan's plan promises that once you reach 65, you will receive a voucher for an amount that he thinks ought to be enough for individuals to purchase a private health-insurance plan.... If that voucher isn't worth enough for some particular senior to buy insurance, and that particular senior isn't wealthy enough to top off the coverage, or is a bit forgetful and neglects to purchase insurance, there's no guarantee that that person will be insured. It's up to you; you carry the risk.

Mr Ryan thinks this is a good thing, because individuals who are responsible for paying for their own health insurance will be strongly motivated to seek better insurance at a lower price. I think this is a terrible thing, because the mechanism Mr Ryan is using to incentivise people to seek better coverage for the price is to expose them to the risk that they will suffer from disease for which their insurance doesn't cover them. The threat that you will suffer illness with inadequate treatment because you can't afford it and your insurance doesn't cover it is certainly a pretty strong motivator for most people to seek better insurance. But the purpose of insurance is to insulate people from risks like that. Furthermore, individuals do not have negotiating power when they go up against health-insurance companies....

The idea of making market forces work to bring down health-care and health-insurance costs is plausible. What's not plausible is the idea that average individuals are the best-placed people to be carrying out those negotiations....

When I say using market forces to bring down health-care expenditures is "plausible", I mean that while it seems like it ought to work, the evidence is telling us that it may not. As Uwe Reinhardt explains, insurance companies don't seem to be capable of holding down provider costs to anywhere near the rate of inflation, even though in theory you'd expect them to do so in order to bolster their profits. Austin Frakt writes that while private Medicare Advantage plans cost more than government-run fee-for-service Medicare, we've never really seen a level-playing-field contest between private and public Medicare, and we simply don't know which would cost more. And the  CBO's analysis of the plan, as Mr Ryan articulated it with Alice Rivlin when both were serving on the president's deficit reduction commission last year, found that "Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law," because "future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare."...

I agree with Mr Ryan that the government needs to limit taxpayers' exposure to Medicare cost inflation. I think this plan is a fundamentally immoral way to do it.

Comments