Q&A: Medicare Politics in the 2012 Election


Question

Comments: Dear AARP

I am a current member of AARP and have your Supplemental Medicare Insurance Plan via UHC.

I am confused with the Democratic and Republican proposals for Medicare via their platforms.  In the Democratic Plan, we enjoy the elimination of the “DONUT” hole via the AFFORDABLE CARE ACT (Obamacare).  The Republicans say that they will not change our coverage for those over 55, however, they want to repeal OBAMACARE and by doing so, do they not automatically cost ALL Medicare recipients hundreds or thousands of additional dollars per year for med co pays and wellness upkeep?  Additionally, I need to know more about the voucher system.

I am hoping that perhaps AARP would put a chart up via advertisement to address the two programs as someone is lying or misrepresenting their claims to the American people and I doubt that I would trust much of the false political advertisement I hear each day.

Answer

Thank you for your inquiries, I will try my best to provide some clarification. Obviously, Medicare is a heated current issue of the election, drawing much attention recently. Both parties are seeking their own routes to curb the growth of Medicare, with 10,000 members joining per day.

The goal is supposedly minimizing government spending (and brew controversy to sway people’s opinions and create fear of what’s to come), though it isn’t entirely certain what either plan will ultimately result in.

The Left Side

The Affordable Care Act (ACA) set up ACOs, the Independent Payment Advisory Board, and other methods of regulating Medicare costs. Title III and IV of the PPACA address Medicare, with dozens of ways to find out what quality is, how to pay for quality care instead of number of services, and make it easier to Medicare to adapt – reflecting knowledge about what quality is and how to pay for it. Here are some highlights of the ACA’s Medicare revisions:

  • Independent Payment Advisory Board: a 15-person panel to control costs by proposing packages of reforms to keep Medicare in a certain spending limit.
  • IPAB’s expanded mandate (Title IV, pages 33-37) allows them to change Medicare’s benefit package and set a growth cap on Medicare of GDP +0.5 percentage points. (Same as Rep. Ryan’s latest draft of his Medicare proposal)
  • Center for Medicare and Medicaid Innovation
  • Hospital reimbursement cuts if the number of readmitted Medicare patients is too high
  • Value-based purchasing for hospital services
  • Collecting data on quality of care from providers
  • Advancing the medical home model
  • Patient-Centered Outcomes Research Institute

 

The Right Side

Rep. Vice Presidential candidate, Paul Ryan has had a Medicare overhaul mission in mind since 2008, though he recently made drastic revisions that are now a huge focal point of the 2012 race. Yes, this essentially means Medicare beneficiaries will be paying more for their health care. The latest adjustment to the new concept from Ryan would have the same cap on Medicare’s future growth as the changes from the ACA.

Voucher System

Romney would give Medicare recipients a voucher allowing them to decide between traditional Medicare or a private policy. Representatives of Romney say his plan will use competitive bidding, where the value is tied to the least expensive plan, or second least in some versions. Beneficiaries will have the option of choosing a more expensive plan, in which they will have to pay the difference out-of-pocket.

In your case, it sounds like you would be able to keep your AARP Medicare benefits if you feel comfortable with it.

 

The Medicare caps will have to be run by Congress at the end of the day, which leaves a great deal of uncertainty in regards to the slanderous advertising claims. Both parties are in favor of limiting Medicare enrollment and program growth. Thus far, the Democratic approach is much more detailed and drawn out than the Republican idea, with the potential for negative consequences on either side.

Who to believe? Well, someone is going to win, and they both want to keep the government’s money in the hands of the government. Ryan recently flip-flopped his plan in order to hopefully appeal to a broader audience, though initially slamming IPAB and Medicare cuts, which he now embraces.

It is confusing, as the claim of both Obama’s and Ryan’s methods are to spend less on health care by receiving less health care – avoiding unnecessary services. Ryan’s plan to slow the growth of health-care costs involves shifting incentives, therefore requiring Medicare beneficiaries to pay more – according to the Congressional Budget Office’s projection.

You may find this helpful. ABC News posted this article a few weeks ago, explaining Ryan’s plan for Medicare:

  • Originally Ryan’s plan stated that the government would no longer pay doctors to treat Medicare beneficiaries. Instead, beneficiaries would buy their own private insurance plans, and the government would give people money to pay to buy health plans from an approved list.
  • Everyone over 55 would be grandfathered into the current Medicare system. So if you’re of Medicare age right now, nothing would change if Ryan’s 2011 plan became law tomorrow.
  • Now after Ryan and Wyden made major revisions, including a provision like Democrats’ “public option,” where seniors could opt out of Ryan’s most basic change altogether, enrolling in Medicare as a fee-for-service program that would continue to pay directly for care. The Ryan-Wyden plan of December 2011, the basis for what Ryan included in his 2012 budget plan, differs widely in key areas from the spring-2011 iteration of Ryan’s plan–the version for which he became known.
  • Until now, Medicare has operated as a “fee-for-service” system; under Ryan’s plan, it would operate more like a voucher system, although Ryan and his aides have resisted this term.
  • Medicare would cease to pay for health services directly, instead operating as a board that approves a menu of health plans for public sale and doles out predetermined lumps of money to people enrolled in Medicare, to help them buy those plans.
  • If you’re poorer or sicker, you get more money from Medicare to cover your premiums. Think of it like “Obamacare” for seniors: Beneficiaries buy plans listed on a government-approved “exchange” of sorts, with more subsidy payments going to poorer people and those more expensive to cover.

The full article is available here.

 

Though this may not be as organized as a chart from AARP, I hope this offered a bit of clarity in the fog of election ad bombardment. Please let us know if we can do anything else to help in the future.


About B. Somers

B. Somers is a contributor to Health Insurance News, focusing on medical coverage, carriers, health reform and the conflicts surrounding insurance. Writing for the company's sites has provided a strong introduction to health insurance, and the opportunity to gain knowledge in the insurance industry.