Posted on 12/21/2017 10:39:37 AM PST by Kaslin
If Congress fails to comprehensively reform Medicare, seniors will miss out on significant savings, and taxpayers will miss out on the opportunity to slow the program’s cost growth.
Unfortunately, however, if Congress fails to address comprehensive Medicare reform, beneficiaries will miss out on significant savings in their pocketbooks, and taxpayers will miss out on the opportunity to slow the growth of the program’s expenses. This “win-win” proposition—seniors save money, as do taxpayers—could help the federal government solve its growing entitlement shortfalls, but only if Congress has the courage to act.
Lost in the cacophony of debate surrounding Obamacare “repeal-and-replace” legislation, the Congressional Budget Office (CBO) in October released an updated analysis of illustrative proposals to create a premium support program for Medicare. The report explained how and why premium support could save even more money than CBO had estimated just a few years ago.
To the uninitiated, premium support would transform Medicare into a program roughly akin to the federal employee health benefit plan, or the Obamacare exchanges established in 2014. Insurers, including traditional government-run Medicare, would bid against each other to offer the usual complement of Medicare services.
In each bidding area, whether a county, state, or region, officials would determine a “benchmark” bid—based on, for instance, the average of all plan bids, or the second-lowest plan bid. (Obamacare exchanges use the second-lowest plan bid.) Beneficiaries would receive a sum from the federal government to cover the cost of a benchmark plan in their area. If a senior selected a plan costing less than the benchmark amount, he or she would receive the difference in savings; conversely, if a senior selected a plan costing more than the benchmark, he or she would pay the difference in higher premiums.
Compared to an earlier CBO report released in September 2013, the updated analysis shows greater savings from implementing premium support. In ten-year budget terms, the second-lowest bid option would save $419 billion, while the average bid option would save $184 billion—up from $275 billion and $69 billion, respectively, four years ago.
The savings grow more when expressed in percentage terms: Whereas CBO thought the average bid option, once fully implemented, would reduce federal spending by between 1 and 7 percent in its 2013 analysis, now the budget office believes that option would reduce federal spending by 8 percent.
The October report cited several factors that put both upward and downward pressure on the amount of federal savings. In general, however, two factors stood out. First, Congress passed a law repealing the Medicare sustainable growth rate mechanism in 2015. That law increased projected spending in traditional fee-for-service Medicare, making it less financially competitive when compared to private Medicare Advantage plans.
Second, the Medicare Advantage plans have become more efficient, reducing their bids when compared to traditional Medicare. With plans already operating in a more competitive environment, the federal government could achieve greater savings by altering the bidding structure to harness that competitive environment.
In general, while the second-lowest bid option would achieve greater savings for the federal government, the average bid option seems the likeliest to achieve the political consensus necessary to ensure its enactment. Setting a lower benchmark, as the second-lowest bid option would do in most if not all markets, would require more seniors to pay additional premiums, as more plans would exceed the benchmark.
The CBO analysis puts the difference between the two options in stark relief. Whereas the second-lowest bid option would raise average seniors’ average premiums by 35 percent—with much higher spikes in costly areas of the country—the average bid option would lower—yes, lower—seniors’ Medicare premiums by an average of 7 percent. The average bid option would also reduce overall out-of-pocket spending (i.e., including deductibles and co-payments) for seniors by an average of 5 percent, compared to an 18 percent increase under the second-lowest bid option.
To this conservative, the average bid option seems much more politically palatable. While any plan will result in confusion and controversy, one that will save both taxpayers and seniors money provides a strong incentive to transition to a new system. Congress can adjust the formula over time as needed, to reflect any difficulties in implementation and changes in our fiscal outlook. But the transition should happen—sooner rather than later.
Of course, enacting Medicare reform involves overcoming partisan attacks and demagoguery—as the ads depicting Republicans throwing granny off a cliff so vividly illustrate. Democrats ran those ads against Ryan in the past, and no doubt will do so again the minute conservatives contemplate a serious effort to reform Medicare.
But conservatives—and Congress as a whole—have no choice but to reform entitlements. As previously noted, Medicare would already be financially insolvent but for Obamacare’s fiscal gimmickry—the accounting scheme that allows Medicare savings simultaneously to make Medicare solvent and fund Obamacare.
With the federal government more than $20 trillion in debt, the fiscal crisis grows closer by the day. CBO has laid out the pathway to a more sustainable fiscal future, one that would help save Medicare for future generations, while saving this generation of seniors money. All our country requires is a group of political leaders willing to lead, and put the plan into place.
Health care from the lowest bidder.
What could go wrong?
You run off all the folks who wish to provide good reasoned service for a reasoned price, by refusing their bids to bring in the lowest bidder who will cut too many corners.
All sounds good until you realize they won’t use the same judgement you would, if hiring a contractor.
Heart surgery for $372.50? Why not? You win! Welcome aboard our newest health contractor.
Obamacare for elders. What could possibly go wrong with that?
Insurers, including traditional government-run Medicare, would bid against each other to offer the usual complement of Medicare services.
Medicare recipients are 65 and older. Unlike standard healthcare insurance, there isn't really any pool of healthy individuals making few claims to offset those making more claims. So you're asking insurance companies to bid on providing coverage for people they haven't a chance of making a profit on. So why should they want to get into the business?
The Social Security increase for 2018 which was a pathetic 2% (government joke, right?)ended up being nothing because they increased the cost of garbage Medicare!!
Net gain (bend over) was ZERO! That was a huge help NOT.
More Federalist globalist crap which if enacted will shift costs to seniors. Also you can kiss off any future gop victories. Federalist is just a gop donor globalist rag constantly trying to shift costs.
I believe that any fixes need to be ones that move toward the private sector. How do we achieve that.
What we have now grew over nearly 50 years. The solution will have to be phased in.
We start the process today, and in 20 years half of folks will have their own medical insurance. In 40 years there will be almost no one on Medicare as we know it now.
Sounds like a very long time. When we think of 1980 and now, it doesn’t seem all that long ago.
Time to get to work, and Social Security needs to go on the same path now.
In 40 years we have almost nobody under the government wing.
Cool. Well worth the process.
Much of medicare is already medicare Advantage which is the competitive hmo plan. What this dirtbag jacobs and the corrupt globalists want to do is replace govt payments with vouchers which they can over time reduce and eliminate thus turning the program into being funded entirely by seniors. Thats where dirtbag paul ryan and his gop donors have tried for years. This article is just more of the PR propaganda effort to soften up the public so ryan can try this scam next year.
I think they're called Death Panels.
You see those of us elderly who are on Social security and medicare do pay for it,
Wouldn’t put anything past these folks.
I would be in a world of hurt if what I planed for for my entire adult life were to be flipped upside down by one of these quacks.
Hand in hand at the very least...
The University System in Georgia recently went to a similar “premium support” plan for its retirees. Each retiree gets a fixed amount of money to spend on medical insurance premiums (for Medicare Part D and Medicare Advantage or Medicare Supplemental insurance). The immediate problem for many retires is that the premiums have risen by 10-15% per year, while the “voucher” amount has remained the same. Over time the “subsidy” will become a smaller fraction of the premium.
Since the government won’t do the only thing it SHOULD do with regards to healthcare, which is breakup the monopolies and prosecute price fixing under existing Anti-Trust law, the only thing that will be done is cost shifting to the consumer to pay for ever increasing health insurance premiums.
I’m a 63 yr old disabled Medicare member, covered by Martin’s Point Generations Advantage top-shelf plan. It costs me zero over the Medicare premium of $135, and it is the most efficient insurance operation that I’ve ever encountered.
The other major savings to be had in Medicare spending is re-vamping the purchasing procedure for DME and covered supplies to be more patient-centric. Medicare as a intermediary adds huge administrative cost.
Meanwhile, MILLIONS for the rotten carcasses that sit in the UN and the parasite states which send them!
“which if enacted will shift costs to seniors.“
Why shouldn’t it? They consume the vast majority of health care services.
L
I’m glad that is working for you.
I know there are some good plans out there, I have one myself. It’s a low priced supplementary. I’m very happy with it.
It seems insurance companies and Medicare have provided some decent coordination. One thing I fear is that if Medicare falls away, what stops the future companies from ignoring the agreements we have now.
I’m fully covered for everything. What happens if a private company starts charging me $100 - $500 per month for what I’m already getting at a decent cost?
I still believe the best way to change Medicare, is to start privatizing people today, who are just entering the work-force.
It’s also my take, that one way or another the seniors who planned for a lifetime to get by now, will be sold out in a process that puts their coverage on the table today.
“There are some provider issues that we may be addressing as you know. Some providers in the Medicare field in some cases are getting overpaid.
Certainly not the physician providers. However, if this is the prevailing view, most independent physicians will drop out. Ironically, as providers drop out there will be competition for self pay patients and prices will fall.
Legislation to allow private contracting for Medicare providers and patients could help.
Because they already paid into social security and medicare their entire work life. Do you think this money people paid for 40-50 years should just vanish?
“Because they already paid into social security and medicare their entire work life.”
This is going to sound really harsh. But your generation fell for a lie.
You believed a bunch of politicians who said “If you give us some of your money now, we will give you much, much, more later. Honest. We promise.”
That trick NEVER works.
It never has worked.
It’s never going to work.
“Face it, Otter. You f***** up. You trusted us.” Animal House.
I know it hurts. And you probably hate me for throwing all in your face. But it’s the truth. Your money is gone. My money is gone. They spent it.
They spent it buying votes. Every f****** penny of it. It’s gone like a fart in the wind.
So, it’s time to face some really hard facts. There’s no way the US government can pay what’s been promised. The math doesn’t work. It was never going to work. It couldn’t.
The only real question is how we are going to deal with those facts.
Merry Christmas.
L
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