Paul Ryan's "Medicare Exchange"


Paul Ryan is Romney's choice. Conservatives remember with glee how Ryan shredded Obamacare at the President's health care summit. Ryan said the bill was "full of smoke and mirrors." He looked right into the President's eyes. Six minutes later, Obama could barely respond.
Ryan's Medicare proposal now takes center stage. In March, Paul Ryan created shock waves with the Medicare reform proposed in his 2013 budget called "The Path to Prosperity."  His bold step changed the debate forever. Mr. Ryan's Medicare proposal "begins with a commitment to keep the promises made to those who now are in or near retirement. Consequently, for those 55 and older, the Medicare program and its benefits will remain as they are, without change." Thus he acknowledges the dependent situation of some of the elderly. 
I'd like to report that Mr. Ryan, who brings all his Midwestern niceness into seemingly every encounter, proposes to completely obliterate Obamacare-like policies and give Americans a non-Medicare option in their sunset years. However, here are a few details:
First, I'm pleased to tell you that Ryan's plan repeals Obamacare (p. 94). But then his plan "would set up a carefully monitored exchange for Medicare plans" (p. 97), which would act much like the ACA's federal Exchange, with the government deciding which plans are available to seniors. He would also extend it to "non-retirees by giving certain employers the option to offer their employees a free choice option, smoothing the transition from their working years to when seniors become Medicare-eligible" (p. 97). This portends the possibility of the Medicare Exchange becoming a National Exchange.
Mr. Ryan's plan does move Medicare to a defined contribution program which he calls "premium support" (p. 96). However, it's not a voucher given to the individual, and just like the ACA, these government subsidies would be directly distributed to health plans through the Exchange (p. 97). 
Also, like the ACA, a cap on the growth rate of spending would be implemented (p. 53). And finally, like the ACA, his plan includes "risk adjustment," which is done through profiling of patients. Higher payments go to health plans that enroll high-risk recipients (p. 219). Means-testing of seniors would also be required (p. 98), the age of eligibility would increase in 2023 (p. 97), and medical liability lawsuits would be limited (p. 98). Thus, Medicare would stay in place with various government intrusions and controls on choice, access and price.
Will Ryan's plan end Medicare as we know it? Medicare-as-we-know-it is already ending. The $38 trillion unfunded liability is three times the national debt, with bankruptcy possible as early as 2016. Medicare can't be saved in its present form. This is what scares politicians of all stripes who could soon be in the line of fire from 77 million babyboomers whose "retirement security" program is going bust.
While Paul Ryan's current plan contains some troubling provisions and does not create a needed escape hatch for seniors, it does recognize the crisis ahead and begin the critical "What next?" discussion.
--President's Commentary, Twila Brase, CCHF Health Freedom eNews, 


Paul Ryan's "The Path to Prosperity" Budget, March 20, 2012 - pdf

Ryan Budget Plan - "Blueprint for American Renewal," March 23, 2012

"House Sends Mixed Messages on Exchanges," David Nather, POLITICO PRO, April 28, 2012 (subscription only):

"...The exchange repeal bill, sponsored by House Energy and Commerce Committee Chairman Fred Upton (R-Mich.), would get rid of the mandatory funding in the health care law that gives HHS an automatic supply of money for the state exchanges.

"The bill is one of five measures House Republicans have prepared to defund parts of the ACA that are funded through mandatory spending. But the idea of going after exchanges may be hard to explain, given that Ryan and other Republicans have been pitching his Medicare plan as a new approach that would let them, in Ryan’s words, enroll in “the same kind of health care program that members of Congress enjoy.”

"That’s because the private health insurance plans that would be subsidized by Medicare would be offered through a new exchange. According to the budget resolution report language, the plan “would set up a carefully monitored exchange for Medicare plans. Health plans that chose to participate in the Medicare Exchange would agree to offer insurance to all Medicare beneficiaries to avoid cherry-picking and ensure that Medicare’s sickest and highest-cost beneficiaries received coverage.”

"Ryan’s aides said the exchange ideas aren’t comparable, because Medicare beneficiaries have more health care needs than the rest of the population and people under age 65 shouldn’t be lumped together into regulated marketplaces with a narrow range of coverage options.

"In Ryan’s view, a Medicare exchange would work more like existing programs, such as Part D and Medicare Advantage that are aimed at one specific population, while patients in other age groups would be free to have a wider range of health plans than the ACA exchanges would provide. ...."

CCHF COMMENT ON MEDICARE EXCHANGE: The Obama Administration has set up its Exchange office (CCIIO) in the Medicare Administration to siphon off Medicare dollars for the creation of a single Federal Exchange, according to Cato Institute in a video. Obamacare authorizes a federally-run exchange if state refuse to set up state-run exchanges, but did not fund it. They thought (hoped?) that all the states would comply with the "shall...establish" order in law to create their own state exchanges (web portals into a National Exchange architecture).

The feds can't force States to comply. That would be federal commandeering of States, which is unconstitutional. At least 29 states (see image below) are refusing. The administration is seeking $750M to create a federally-run Exchange ("'Exchange' for the Worst," July 30, WSJ).

Thus, Ryan's plan risks supporting Obamacare's national exchange effort, or advancing it. Once a single online federally-run Exchange for Medicare is funded and established for senior citizens in all 50 states to use, the federal government could easily push to make it the sole place for all citizens to buy insurance. The result would be a Single-Seller System --- and a short walk to Single-Payer.