Is Medicare the cause of present and predicted budget deficits? Does it provide boutique care for seniors while the rest of the population struggles to pay for essentials? Or is Medicare an essential component of health care in an advanced nation, enabling older people to be contributing members of society for more years? Does Medicare reduce the burden of care on local facilities? Or does Medicare enable people to live “too long?”
Proposals for changing Medicare will continue to be controversial as the budget process moves forward, but no one is proposing to eliminate this popular program. That would be political suicide. A voucher program proposed by U.S. Representative Paul Ryan (R, Wisconsin) is included in the budget recently passed by the House. Implementation of this change would not take affect for citizens now age 55 and older.
A capped, annual voucher would be allocated for each Medicare recipient, who would use the voucher to buy health insurance in the private market. This is not a new concept. In some ways it is similar to the current Medicare Advantage program, where the private insurer gets a monthly payment to cover the Medicare recipient. As readers may know, the government had to increase the amount it paid to private insurance companies (the voucher) over the cost of traditional Medicare. Otherwise, the private market wasn’t interested.
Vouchers would not be sufficient to buy coverage equal to that of Medicare, according to a Congressional Budget Office analysis. What services would be covered, and what not covered, is not yet known. But a voucher plan would likely increase out-of-pocket costs. Nor does the voucher proposal include consumer protection, to prevent higher premiums based on age. It is not likely to survive the Senate budget negotiations just ahead.
The Ryan proposal is not the only proposal for reining in Medicare costs, which are indeed rising. Note, however, that Medicare costs are increasing at less than the rate of health care costs overall. Per enrollee spending in private health insurance grew at an average annual rate of 9.3 percent per year between 1970 and 2008. Medicare spending grew at an average annual rate of 8.3 percent. The industry-wide increase in health care costs is a major factor in the increased cost of Medicare.