Right-Wing Senators Offer Competing Medicare Reform Plan
Things are getting more and more curious on the Hill as various factions line up to offer their Medicare reform proposals to kick off budget season. Four far-right Senators — Rand Paul of Kentucky, Mike Lee of Utah and South Carolina’s Lindsey Graham and Jim DeMint — will unveil a plan Thursday that would transition Medicare beneficiaries into the same health care program offered to federal employees, while gradually increasing the eligibility age and means testing. The proposal arrives less than a week before House Budget Chairman Paul Ryan, R-WI, is expected to release his own Medicare overhaul plan in a fiscal 2013 budget proposal.
The plan would allow seniors to enroll in the Federal Employees Health Benefits Program (FEHBP) beginning in 2014. Everyone in FEHBP pays the same premium, and plans must accept all comers. The proposal would literally phase out the existing Medicare program over an unspecified time period. Instead, seniors would be able to choose from the same options that federal employees (and Members of Congress) have. The proposal “provides Medicare patients with the best health care in America and will forever protect seniors’ interests by aligning them with self-interested politicians,” a fact sheet said.
Under the senators’ bill, the federal government would subsidize three-quarters of the cost of the average plan for enrollees. To prevent health care plans from selecting only the healthiest patients, the government would pay plans 90 percent of the total costs for treating the top 5 percent of their most expensive enrollees. The plan would gradually shift the eligibility age for seniors by three months annually until it reaches 70 in 2034. Wealthier seniors would pay a greater percentage of the costs, and Medicaid would provide assistance to low-income seniors. Republican staffers estimated that the plan would reduce the deficit by $1 trillion over 10 years and reduce Medicare’s gap between the cost of promised benefits and its revenue from taxes and premiums by almost $16 trillion over a 75-year window. They also said the bill would save individual enrollees $1,500 per year in out-of-pocket costs.
While from a policy standpoint this isn’t a bad concept, in reality this thing doesn’t seem to stand a chance in hell. Just giving credence to Democrats’ “MediScare” talking points that the GOP wants to “kill Medicare as we know it” — as it does — seems a kiss of death, especially in an election year with most 65+ voters more nervous than a long-tailed cat in a roomful of rocking chairs. But it’s the timetable of their proposal that also provides a stiff headwind: it would go into effect in 2014, when most other proposals have delayed changes into the next decade so seniors currently enrolled in the program would not be affected.
In his fiscal 2012 budget proposal, Ryan proposed transforming Medicare into a system under which seniors receive government payments to purchase private health insurance plans beginning in 2022. Supporters compared the system to the federal employees’ health plan, but Democrats derided it for ending traditional Medicare, saying it would endanger guaranteed health care coverage for seniors.
Ryan will introduce his plan next week with new wingman Sen. Ron Wyden, D-OR, which would create a new competitive insurance marketplace in 2022. Ryan/Wyden would allow seniors to choose between approved private plans in the marketplace and the traditional fee-for-service Medicare model. It would control costs by giving seniors an annual federal subsidy to help pay for the approved private plans or traditional Medicare.
Wyden said this week that he was encouraged by North Dakota Democrat Kent Conrad‘s enthusiasm for the proposal during a recent hearing of the Senate Budget Committee, which Conrad chairs. Wyden said he would spend the rest of the year trying to build bipartisan consensus for addressing Medicare. With the Senate’s most conservative members laying down their own marker, the elusiveness of election-year consensus may be compounded.