Say what you want about Rep. Paul Ryan's plan to revamp Medicare, the man has akeen sense of irony.
As part of a Republican spending proposal for 2012 and beyond, the House BudgetCommittee chairman wants to scrap Medicare as we know it and have seniors buyprivate insurance, beginning with new retirees in 2022.
This comes after two years of Republicans pillorying Democrats for seeking Medicare cuts of much smaller scale. But that's just politics. The real irony isthis: The plan won't work unless joined with something much like the 2010 healthcare law Republicans want to repeal. That law, sometimes called ObamaCare bycritics, creates regulated insurance markets with a variety of inducements,subsidies and requirements, to help the 51 million people who can't afford, orcan't get, coverage.
The GOP plan (let's call it RyanCare just to balance the scales), would treatseniors the same way, starting with people currently younger than 55 when theyreach Medicare age. Unlike older people, who would continue to be under theprotective umbrella of government coverage, they would be given a governmentsubsidy to buy coverage in private markets, posing the question of whichcompanies would want to insure them.
As things stand, the answer is few, if any. Before the creation of Medicare in1965, the insurance industry wanted little to do with seniors. They are thecostliest segment of society to insure, accounting for 33% of medicalexpenditures but only 12% of the population. Though private companies are nowinsuring some seniors through a program called Medicare Advantage, this worksonly because it is subsidized by taxpayers over and above regular Medicare, andbecause companies cherry-pick the healthiest customers.
To take on the entire senior market, insurers would need considerableinducements. And seniors would reasonably demand competitive markets, multiple options, and some level of government oversight to make sure that they are beingtreated fairly.
For starters, RyanCare (which is only in a skeletal form now) would need thetypes of exchanges set up by ObamaCare. To some degree, Ryan acknowledges this. But he carefully chooses to compare his exchanges not to those in ObamaCare, butto those used by federal employees, a dubious comparison because federalemployees are extremely attractive to insurers as they tend to be healthy,well-educated and stably employed. Regardless, exchanges are mainly a place forpeople to pick conveniently among certified plans.
Beyond that relatively simple issue, it is far from clear whether a poolconsisting solely of seniors (with their high costs and fixed incomes) would beviable. ObamaCare would put all private buyers in a single pool in 2014. Addingseniors to that pool would be less challenging than creating a seniors-onlypool. The law allows insurance companies to create different price bandsdepending on age, though with limits that still benefit the older population.
Then there is that little issue of an individual mandate, the one that Republicans are challenging in court. If seniors are to have a right to buyprivate insurance regardless of pre-existing conditions, insurers wouldnaturally demand such a mandate. They won't cover a population where people canwait until they get cancer or diabetes to buy coverage. That's not how insuranceworks. It's about sharing risk.
Alternatively, the Ryan plan could leave seniors with no right, or a limitedright, such as a one-time chance at retirement age.
In either case, a very significant number of seniors would be left without protection. It's one thing to bash the individual mandate as a way to rally theopposition against the opposing party's agenda. It's another to do so whileselling a major new program of your own imbued with the troubling consequencesif it lacks the requirement.
The individual mandate was originally the work of conservative thinkers at the Heritage Foundation and other institutions. The same goes for the exchanges.Until the past few years, the individual mandate was championed by Republicanlawmakers as a cornerstone of creating private insurance markets (whilecandidate Barack Obama was skeptical of it). If Republicans really want tocreate private markets for seniors, there is a good chance the two sides willhave to switch sides again.
We point out these ironies in hope (probably vain) that each party would insteadhave an epiphany on health care. For Republicans, we would hope that they getbeyond the imbecilic politics of trying to repeal ObamaCare, and focus on whatin it needs to be modified, improved, or scaled back. While the law is arguablytoo generous and too bureaucratic in some areas, its core purpose of creatingprivate markets is highly useful, not only to covering the uninsured but also asa platform for future reforms. In addition to working with Ryan's Medicare proposal, it could be matched up with an intriguing proposal he left out of hislatest plan that would encourage workers to get their insurance independently oftheir employers.
As for Democrats, we would hope that they begin to acknowledge the obvious: thatexploding costs for Medicare (and health care more generally) need to beconstrained in ways that ObamaCare does not even begin to touch. The public willnot like any of these, no matter which party produces them. They're all choicesbetween paying more or getting less.
Until these things happen, we can at least be amused by the absurdity ofcontemporary politics.
Copyright 2011 Gannett Company, Inc.
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