Medicare reform redux: How Ryan’s new plan would squeeze seniors

Imagine a Medicare reform plan that boosts your premiums 50 percent. If you like your doctor, you won’t be able to keep her. The wealthy will subsidize healthcare for poor seniors.

An Obamacare takeover of Medicare? Nope. It’s the latest iteration of “premium support,” the plan for Medicare unveiled this week by U.S. Representative Paul Ryan (R-Wisconsin).

Ryan, who chairs the House Budget Committee, unveiled a deficit-reducing budget plan for fiscal 2015 that would give seniors vouchers to buy private insurance coverage in lieu of traditional Medicare. The plan also includes sharp cuts to Medicaid and food stamps, and repeal of the Affordable Care Act. With Democrats in control of the Senate and White House, it has no chance of becoming law this year.

But Ryan has proposed several Medicare premium support plans since 2010, so there can be no doubt this is where Republicans will take us if they gain control of Congress and the White House. And Ryan’s decision to double down (again) on this will make Medicare a midterm election issue this year. So let’s do a refresher on what this brand of Medicare reform would mean for seniors.

Under Ryan’s latest plan, starting in 2024, everyone turning 65 would choose between private insurance plans and traditional Medicare. Once there, they would receive a voucher from the federal government to purchase medical coverage from a private insurer in a public exchange, or to pay for traditional fee-for-service Medicare.

The key takeaways:

– Premiums jump. Traditional Medicare premiums would be 50 percent higher in 2020 than under current projections, according to the Congressional Budget Office(CBO).
– Restricted physician choice. Private plans will restrict health provider choices;that’s just a fact of life in managed care. Some seniors using Medicare Advantage learned that the hard way last fall when one of the biggest plan providers, UnitedHealthCare, dropped thousands of providers on short notice from its networks in 10 states. The move prompted an outcry from patients and doctors, and Medicare is preparing rules requiring greater advance warning. But Advantage plans always can drop providers when they can’t strike deals with them on reimbursement rates, and that would be the case under premium support.
– Rich people pay more. Ryan’s plan states that “wealthy seniors would assume responsibility for a greater share of their premiums, while “lower income seniors would receive additional assistance to help cover out-of-pocket costs.” Wealthy seniors already pay plenty more for the same services everyone else receives; high-income premium surcharges kick in if you have income of $85,000 (individual filers) or $170,000 (joint filers). High-income seniors can afford to pay more, but they get nothing additional in return. That undermines Medicare’s structure as a social insurance system that treats all participants equally.

Learn more in my column today at Reuters Money.