Paul Ryan’s Misleading Sales Pitch; Why “Premium Support” Isn’t

Posted by | May 30, 2011 13:52 | Filed under: Top Stories

Paul Ryan calls his plan for Medicare “premium support”.  But the creators of that concept, Henry Aaron of Brookings (not the baseball player) and Bob Reischauer of the Urban Institute, say Ryan is misusing the term.

Ezra Klein: I think a lot of us have been confused by Paul Ryan’s insistence that his Medicare plan be called “premium support” rather than vouchers. It looks like vouchers. The Congressional Budget Office thought it was vouchers. So what’s the truth here?

Henry Aaron: Me and Bob Reischauer jointly created the idea of “premium-support” in the mid-1990s. It was a response to what we saw as legitimate criticisms of using market forces to rein in the growth of federal health spending. The worry was the reliable savings would come from shifting costs onto patients. The savings from competition were just something we hoped would show up. So the key element was linking the amount that individuals receive to the growth of health-care spending, not to some other index that would grow less rapidly than health-care costs. The other two elements were aggressive regulation of health-care insurance offerings to prevent insurers from overwhelming people’s capacities to sift alternative plans and risk adjustment…

There’s one provision of the Ryan bill that stands out as being hands-down the worst, and that is giving the seniors who are poor enough to also be on Medicaid a medical savings account. Does he know who these people are? They’re very sick, they’re very poor and many of them have cognitive as well as physical problems. They would be asked to cope with the inevitable headaches of dealing with private insurance and managing a personal checking account to pay periodic bills. This is not a sensible proposal.

As the New York Times notes, health care costs will rise much faster than the subsidies available, meaning beneficiaries would be stuck with ever-increasing portions of their bills.

In his latest video, Mr. Ryan suggests his plan would give beneficiaries “the same kind of system members of Congress enjoy today.” What he fails to mention is that the Federal Employees Health Benefits Program ties the government’s contribution to the increase in premiums. If they go up, so does the amount government pays. In the Ryan plan, the share paid by government would shrink and beneficiaries would pay more with each passing year.

Unless benefits are tied to the increasing costs of premiums those who need health care lose out. The Ryan plan links payments to consumer prices rather than actual health care costs. This will hurt seniors who will have to pay more out of their pockets as time goes on, or reduce coverage.

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Copyright 2011 Liberaland
By: Alan

Alan Colmes is the publisher of Liberaland.

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