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Republican Medicare proposal: A tried-and-failed ‘zombie’

AFL-CIO President Richard Trumka has issued the following statement regarding the Ryan-Wyden plan under which Medicare would merely subsidize premiums charged by private insurers.

The Ryan-Wyden proposal cripples Medicare in order to give the Republican Party a political boost and to earn Senator Wyden praise from powerful people who care more about the appearance of bipartisanship and insurance industry profits than the health of America’s seniors.

The basic idea is to have private for-profit insurance companies compete with traditional Medicare.  But we already know this does not work since Medicare is more cost-effective than private plans and for-profit insurance companies “compete” by cherry-picking healthier patients and making it harder for their sicker patients to get the care they need.

This zombie idea has already been tried and has already failed.  We tried it before with Medicare Advantage, which failed to reduce costs or deliver quality care.  Medicare Advantage’s costs were 13 percent higher than traditional Medicare.

Rep. Ryan spent 2011 on the defensive, defending his politically deadly proposal to replace traditional Medicare with vouchers for private insurance. The Congressional Budget Office already found that plan would increase overall health care costs by $34 trillion over 75 years and increase out-of-pocket costs by $6,000 per senior per year.

Ryan-Wyden is not about cost containment, and even its authors admit that vouchers would not be more cost-effective than traditional Medicare.  So as a fallback they propose a budget cap, but they neglect to provide the necessary details about how their failsafe mechanism would work or who would pay the price for failure.

The Ryan-Wyden plan betrays a fundamental misdiagnosis of the problem of health care cost growth.  We agree that if America fails to bring health care cost growth under control, health care costs will eventually bankrupt families, private businesses, state governments, and the federal government.

But Medicare, which is more cost-effective than private insurance, is not the problem, it is the solution to runaway health care costs. It is the height of irony that the Ryan-Wyden plan destabilizes the most effective tool we have to control health care cost growth, which is Medicare.  Under Ryan-Wyden,  private for-profit insurance companies will cherry pick the healthiest seniors and stick Medicare with sicker and more costly seniors, driving up costs for Medicare, fragmenting and destabilizing the Medicare risk pool, and leaving traditional Medicare to wither on the vine.

In the end, the answer to the problem of health care cost growth is for more people to use Medicare, not fewer.  The Ryan-Wyden zombie proposal takes us in exactly the wrong direction.

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