The Official Republican Plan to Dismantle Medicare

by on June 6, 2011 · 16 comments

in Economy, Election, Popular

235 Republicans in the House and 40 in the Senate vote to end Medicare as we know it, despite their denial of the facts.  A look at the plan, and the attempt to spin the truth about what the plan really does.

Late last month Republicans in the Senate threw their fate in with that of House Republicans.  Senate Majority Leader Harry Reid (D-NV) brought the Paul Ryan authored budget to a vote in the Senate unaltered, forcing Senate Republicans to officially declare their stance on Medicare.  The bill failed to pass 57-40, but 40 of 45 Senate Republicans voted in favor of the bill.  Every Democrat voted ‘no.’

What that means is that Paul Ryan’s “Path to Prosperity” is now the official Republican budget proposal, since those 40 Senate Republicans were joined in their full throated support to end Medicare as we know it by all but four Republicans in the House of Representatives.   So we can now stop calling it the “Ryan Plan” and simply refer to it as the official Republican budget proposal.

This should all be very good news for Democrats, since nearly EVERY provision in the Republican plan is extremely unpopular, and has been deemed extremely irresponsible and fantastical by several analytical entities.  This, of course, has led to severe retrenchment on the part of Republican lawmakers and candidates everywhere, resulting in squeals of glee from Democrats everywhere.

Ironically the message still hasn’t sunk in on the Republican side of the aisle, even after the stunning victory by Democrat Kathy Hochul in the NY-26 special election for Congress two weeks ago.  The Upstate New York district is among the most conservative in the country, having been gerrymandered in order to assure one solidly Republican Congressional district in a state that typically overwhelmingly votes Democratic.  Put it this way:  Republican and Tea Party favorite “Kooky” Carl Paladino handily won the district with 75% of the vote in his quest to become Governor of New York—a race he lost overall 61% to 34%. (Google his name for news stories and see for yourself what a complete whackjob this guy is, if you’re not already aware).  Until now, NY-26 had been represented by a Republican for over 40 years.

The NY-26 race was defined almost exclusively by the Republican budget proposal—particularly by the way it changes Medicare into a voucher system.  Republican Jane Corwin supported it, Hochul lambasted it.  Yet Republicans insist on doubling and even tripling down on their “kill Medicare” budget plan.

Late last month, Paul Ryan himself finally responded to a list of questions posed by The Washington Post’s Ezra Klein.  It’s well thought out, but Ryan still gets it wrong, and his response is still full of misleading figures and outright fallacies.  Klein gracefully took the opportunity to dismantle Ryan’s assertions here.

A couple of the key points in the exchange:  Ryan compares the Republican plan to the Medicare Prescription Drug Plan passed in 2003 (still unpaid for I might add).  He claims that the plan has come in under budget predictions, and points to it as a stunning success.  Except that it’s not.  Originally the plan was estimated to cost around $395 billion.  The real cost estimates at the time of implementation in 2006 came in at $550 billion, and is estimated to rise to over $1 trillion for the next 10 years.

As Klein points out, it appears that the Medicare Part D did indeed come in at lower than the expected $550 billion, but not because of anything the program did or implemented, and not, as Ryan claims, because of increased competition among drug companies vying for seniors’ business.

A report from the Center on Budget Policy and Priorities finds that the program came in at lower costs than expected for two main reasons:  First, drug companies brought fewer new drugs to market, while more drugs became available in generic form, reducing costs.  It also found that enrollment in the program was far lower than expected.  It was assumed that 93% of eligible seniors would jump at the chance to join the program.  However, the report found that only 77% actually did.

The report also found that Medicare Part D spent MORE for prescription meds than its authors assumed.  The private insurance companies that participated in Part D were expected to negotiate much larger discounts from the pharmaceutical companies, but in fact they paid 20% more than Medicaid did for the same products.  This only tells us that the public “big government” program is more efficient and cost effective than the private insurance route.

Republicans are up in arms at the way Democrats are attacking their plan on Medicare.  Ryan and his cohorts demand that Dems cease and desist from calling it “a plan to kill Medicare,” accusing them of trying to distort the plan and mislead voters.  They’ve gone so far as to demand that an ad being aired in New Hampshire be pulled for accusing Republicans of trying to kill Medicare; an effort that left the National Republican Campaign Committee with egg all over its face.

But it’s Republicans that are trying to mislead and distort.  The difference between the Republicans’ “premium support” and the term “vouchers” is pure semantics.  While it is technically correct that no actual vouchers or coupons will be issued, the effect is identical.  As Paul Krugman put it, “you can name the new program Medicare, but it’s an entirely different program — call it Vouchercare — that would offer nothing like the coverage that the elderly now receive.”

The Republican plan issues a fixed sum of credits to private insurance companies for each beneficiary to put toward their insurance policy from a private insurance company, leaving the individual responsible for all costs above and beyond that fixed amount.  The CBO says that seniors under the Republican plan would be responsible for 68% of their medical costs, as opposed to roughly 25% now.

Republicans claim cost savings in their plan, but all of the government’s savings would come in the form of shifting costs onto seniors.  No actual savings will result, as there are no cost containment provisions in the Republican plan, only blind assumptions based solely on their religious worship of Adam Smith’s “invisible hand” and the belief that competition is the cure to all that ails the current system.

And don’t be fooled by the deliberate misdirect that the program will be preserved “as is” for those currently over 55 years old.  For those of us under 55, Medicare will no longer exist as we know it, and all will be left to the mercies of the private insurance industry.

The Republican assurances that shifting to private insurance providers from a single payer system will save money is utterly laughable.  Never mind that private insurance companies run an overhead of 20% or more, while Medicare operates with a roughly 4%-6% overhead.  The only thing that could possibly drive down costs under the Republican plan is that people can no longer afford to pay for the care they need to save their lives, so more people go without and die sooner from completely treatable and relatively minor ailments.  The fee-for-service model is perpetuated by Republicans because they know it’s the best way to assure huge profits for health care providers.

Plus, we have the added insistence that care decisions be made by “individuals and families” and not by government bureaucrats.  Apparently Paul Ryan would like to see seniors’ health care decisions made by insurance company bureaucrats instead, since that’s precisely where the Republican plan places the ultimate authority.  “Individuals and families” do not make health care decisions, insurance companies do by dictating what types of services and care they will pay for, with the rest left for “individuals and families” to pay for out-of-pocket.

Despite their best efforts to spin the tale in another direction, the official Republican budget plan does indeed kill Medicare as we know it today.  And that should be a non-starter for everyone with a functioning brain.  Our health care system has problems, but those problems won’t be solved by dismantling Medicare and leaving more seniors to wither and die because they can’t get the care they need.  We solve them by attacking the fee-for-service model that is encouraging over testing and unnecessary procedures and sending costs skyrocketing.

This is part 1 of a brief examination of the official Republican budget proposal.  Part 2 will look at the Republican approach to taxes in the plan.


{ 16 comments… read them below or add one }

avatar mr.rick June 6, 2011 at 12:19 pm

Saturday, I awoke stoked because I could finally check out the “Rag” for the first time in over a week. Due to moving. But to make a long story short. I got a chance to talk to the congressman from this district. Tennesse #1. Phil Roe. The first thing I asked him was “What were you guy’s thinking when you voted for the Ryan plan to voucherize Medicare”.The first thing out of his mouth was, Obama care bla,bla bla.” I stopped him and said “You’re being disrespectful, it’s The Affordable Health Care Act. And it should be refered to as such. HeAsked my age . 59. He said nothing would change for me. Well(As I said it.) I’m not gonna leave my baby sisters behind . Or my sons. These guy’s are floggin’ a dead horse and the more they beat this beast, the better for all of us.


avatar Gino Zalunardo June 6, 2011 at 12:23 pm

This country is RICH $15.0 Trillion of income per year and the country Debt is only $14.3 trillion.
All financial institutions, would say you are rich, we be happy to loan you up to 45% of your yearly income which they do every day to borrowers!

What amazes me that everyone is paying attention to deficit, Medicare., etc where the issue is Revenue which can easily be exploited in a one page summarization. This will not only destroy all activities that is going on what this whole Political system but a revolution will start from it! But I can see why no Congress, President, or Media will touch it as it points a finger at all the affluent ones(Congress, President are members of the elite group) and how the Media is so easily manipulated and has been a collaborator in what’s been going on since 1980! By the way so have been the Presidents and Congress people collaborators!

Again, nice article, no information, propaganda, entertainment, you too have been bought! You are part of the problem!


avatar Dr. Bukk June 6, 2011 at 12:27 pm

If you recall, seniors were eating dog food to pay for their prescriptions when Part D was enacted. Thank God it was designed as it was. Insurance companies operate on a 4 – 7% profit margin (I don’t know what you mean by “overhead”) while it is well known that government wastes 50% of its budget. Always has and always will. That is because 50% of its effort is invested in brown-nosing those who determine next year’s budget.


avatar Andy Cohen June 6, 2011 at 2:02 pm

Overhead includes marketing costs, salaries, profit margins, and whatever other accounting tricks they can use to justify keeping a larger portion of the premiums that they collect. Some companies run overheads of over 30%–meaning that 30% of the money you pay in insurance premiums to that company goes to something other than medical care for subscribers.

Medicare, on the other hand, spends between 4% and 6% on costs associated with something other than actual health care expenditures, making it far more efficient and effective than private insurance. In fact, the Affordable Care Act has mandated that insurance companies’ overhead can no longer account for more than 18% of collected premiums once the plan is fully implemented, which means more money will be put into actual medical care rather than executives’ pockets.


avatar Jason June 6, 2011 at 12:38 pm

The GOP has been in full-scale denial of reality for several years now, so this comes as no surprise. What I find funny is the fact that they now cry foul, when just a couple years prior they were accusing the “Obamacare” plan of far worse.


avatar mr.rick June 6, 2011 at 1:36 pm

Dr. Bukk,That 4 to 7 % profit is after the C.E,O.s get their millions (as in hundreds) and the rest of the execs get their’s. The might be alot of waste in medicare, but it’s straight stealing. The $ the execs got is legal. So lets get the crooked docs and devise co’s. And we can put it into health care.


avatar Andy Cohen June 6, 2011 at 2:07 pm

Point of fact: The $500 billion in “cuts to Medicare” that Republicans cried about in 2009 came from the elimination of waste and fraud in the system. It had NOTHING to do with actual cuts to Medicare and the services it provides, and it put that money back into the system to help provide the subsidies that will be made available on the health care exchanges beginning in 2014.

But in Republicanland, taking fraudulently attained money away from private insurers and health care providers (see: Scott, Rick, of Columbia HCA and the current Governor of Florida) equates to cutting Medicare, since it cuts into their benefactors’ profit margins, ill gotten or not.


avatar Frank Gormlie June 6, 2011 at 10:18 pm

Andy, very comprehensive and comprehensible. You’re calling it like it is. If it looks like a duck, quacks like a duck, it’s an end to Medicare as we know it…. Thanks for keeping an eye on this extremely crucial issue under attack.


avatar Dr. Bukk June 7, 2011 at 8:38 am

Americans need to grow up and quit dragging down young adults trying to raise children and buy a home. NOBODY is paying in anywhere enough to cover their expenses, this is just another cost-shifting boondoggle engineered by “The Greatest Generation” or more specifically, “The Greediest Generation”. If you haven’t made it by 65 you are a loser parasite. The poorest patients demand the most services while many well off choose to nobly go ahead and die to preserve their family’s wealth.

When Medicare was conceived, average life expectancy was 65. Now it is 79, Get real, moochers. It is bald-faced demagoguery to say Republicans are doing away with Medicare. We are not demons. The plan is based on Medicare Part D, which cost far less than predicted. Poor people are taken care of. Seniors will NOT be laying in gutters.

Government has no competition. Hardly any reason to cut costs with fraud investigations. It will never equal the efficiency of competing companies.


avatar not a redneck in east county June 7, 2011 at 9:00 am

Your comment about the noble rich dying to preserve their family’s wealth tells me exactly where you’re coming from. What crap. Seniors won’t be laying in gutters, they will be living with the young families who are having a hard enough time already.


avatar Andy Cohen June 7, 2011 at 2:34 pm

Your hatred of the American people is duly noted.

To paraphrase the line from the 1995 movie “The American President,” Republicans claim they love America but clearly hate Americans. This has pretty much been the case since Nixon.


avatar annagrace June 7, 2011 at 8:46 pm

Dr Bukk (aka Ayn Rand) There should be a wall of shame for your comment “If you haven’t made it by 65 you are a loser parasite. The poorest patients demand the most services while many well off choose to nobly go ahead and die to preserve their family’s wealth.”


avatar Dr. Bukk June 8, 2011 at 9:24 am

As a nurse, I see this every day. Fruitless procedures on those who are dying, because of the race or class card being shown. My mother, father and a cousin chose not to be treated for cancer. because it was hopeless. Just where in the Constitution does it say citizens are entitled to free health care? Poor people get it now anyway.

Financial success is the product of hard work, intelligence or inheritance. Anyone in this country can succeed or fail. The “evil” rich spend half the year working for “those less fortunate”. You despise successful people/corporations and think they are stealing from the poor. What a crock. There is no finite amount of money and rich people don’t “steal” from poor. The poor steal from the rich, aided by the government.

Aren’t liberals pro-choice and concerned with a sustainable planet? Ryan’s plan gives you a choice of insurers competing for your account. Or, do you want unelected commissioners deciding your fate? Medicare is not sustainable. Ryan is simply trying to save it. out of concern. He doesn’t want to see seniors dying in our gutters, but it will happen if nothing is done.


avatar annagrace June 8, 2011 at 10:34 am

Another addition to the wall of shame- the noble and financially successful among us are victims of the rapacious poor , non-whites and the government.


avatar mr.rick June 7, 2011 at 5:15 pm

The Republicans don’t hate all americans, just the ones who’o net worth is less than thiers. I’m really glad money is the measure of a persons life. How can this country have gotten so twisted.


avatar BELOWZERO June 15, 2011 at 2:42 pm

Once upon a time a fair ship set sail for North America. On board were all sorts of passengers. Rich ones. Poor ones. Middle ones. The wealthy ones quibbled over deck chairs and other amenities. Not enough of this or that. No one noticed there weren’t enough life boats.

The ship? The Titanic…


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