Special Report Helps Ryan's Medicare Argument “Sink In”

Baier Asks Krauthammer If Ryan's Explanation Is “Sinking In.” From the May 24 edition of Fox News' Special Report:

BRET BAIER: Mentioning Paul Ryan, just want to listen to this, as he's been asked numerous times about this issue and whether the GOP is attacking Medicare.

REP. PAUL RYAN (R-WI) [video clip]: Our budget makes no changes for those in or near retirement. And it offers future generations a strengthened Medicare program that they can count on with guaranteed coverage options, less help for the wealthy, and more for the poor and the sick.

BAIER: He said it numerous times, different ways. Charles, is that sinking in? You look at the ads by Democrats and Jack Davis, the self-proclaimed Tea Party candidate who has essentially ran as a Democrat many times -- they focus on Paul Ryan and this plan.

CHARLES KRAUTHAMMER: Well, if Ryan is explaining it, it sinks in. The problem is that Corwin hasn't explained it that well. She was extremely defensive, running away from this. And unless you're adept at explaining the plan and being behind it, and not saying, oh, well, maybe it's not as bad as you think, you're gonna lose on this issue. I'm not optimistic on this. Even if Corwin, the Republican, pulls it out, it's clear that Mediscare has had an effect here. [Fox News, Special Report with Bret Baier, 5/24/11]

But Special Report Ignored Experts Who Say Ryan's Plan Could Hurt Seniors

Krugman: Ryan's Plan “Would Deprive Many And Probably Most Seniors Of Adequate Health Care.” In an April 7 New York Times column, Nobel Prize-winning economist Paul Krugman wrote that Ryan's budget plan “would deprive many and probably most seniors of adequate health care.” From Krugman's column:

And then there's the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance.

The point here is that privatizing Medicare does nothing, in itself, to limit health-care costs. In fact, it almost surely raises them by adding a layer of middlemen. Yet the House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.

The only way that can happen is if those vouchers are worth much less than the cost of health insurance. In fact, the Congressional Budget Office estimates that by 2030 the value of a voucher would cover only a third of the cost of a private insurance policy equivalent to Medicare as we know it. So the plan would deprive many and probably most seniors of adequate health care. [The New York Times, 4/7/11]

CEPR's Baker: Ryan's Budget Would Force Seniors To Spend Much Of Their Income On Health Insurance. According to Center for Economic Policy Research co-director Dean Baker:

Representative Ryan would replace the current Medicare program with a voucher for people who turn age 65 in 2022 and later. This voucher would be worth $8,000 for someone turning age 65 in that year. It would rise in step with the consumer price index and also as people age. (Health care expenses are higher for people age 75 than age 65.)

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit (Figure 1). This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

According to the Social Security trustees, the benefit for a medium wage earner who first starts collecting benefits at age 65 in 2030 would be $32,200. (This adjusts the benefit projected by the Social Security trustees [$19,652 in 2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For close to 70 percent of seniors, Social Security is more than half of their retirement income. Most seniors will get a benefit that is less than the medium earners benefit described here since their average earnings are less than that of a medium earner and they start collecting Social Security benefits before age 65. [CEPR.net, 4/6/11]

AP: “CBO Said Over Time Future Retirees Would Pay Much More.” The Associated Press reported on April 6:

Most future retirees would pay considerably more for health care under the new budget proposed by House Republicans, according to an analysis by nonpartisan experts for Congress that signals problems ahead for the plan.

The fiscal blueprint would put people now 54 and younger in a different kind of health care program when they retire, unlike the Medicare that their parents and grandparents have known. Instead of coverage for a set of benefits prescribed from Washington, they'd get a federal payment to buy private insurance from a choice of government-regulated plans.

“A typical beneficiary would spend more for health care under the proposal,” the nonpartisan Congressional Budget Office estimated in an analysis released late Tuesday.

The CBO said over time future retirees would pay much more, partly because the Medicare benefits package would be more expensive to deliver through private insurers. By 2030, the government payment would cover only about one-third of the typical retiree's total health care costs, the budget office said.

The sweeping fiscal plan by House Budget Chairman Paul Ryan, R-Wis., would reduce total federal spending, deficits and debt, saving money for federal taxpayers. But it would be tempered by a cost shift to future retirees. [The Associated Press, 4/6/11]

Economist Blog: “Ryan's Plan Ends The Guarantee That All American Seniors Will Have Health Insurance.” An April 5 post on The Economist's Democracy in America blog said:

PAUL RYAN'S plan to replace Medicare with a system of vouchers for seniors to buy health care on the private market has only been vaguely described, as of this writing. But there is one thing about it that's fairly clear, regardless of what's in the details Mr Ryan will announce today: Mr Ryan's plan ends the guarantee that all American seniors will have health insurance. The Medicare system we've had in place for the past 45 years promises that once you reach 65, you will be covered by a government-financed health-insurance plan. Mr Ryan's plan promises that once you reach 65, you will receive a voucher for an amount that he thinks ought to be enough for individuals to purchase a private health-insurance plan. (Mr Ryan insists that his plan doesn't entail a “voucher”, but there is no meaningful distinction between getting a voucher with which to pay for insurance, and having the government send a payment to the insurer you choose.) If that voucher isn't worth enough for some particular senior to buy insurance, and that particular senior isn't wealthy enough to top off the coverage, or is a bit forgetful and neglects to purchase insurance, there's no guarantee that that person will be insured. It's up to you; you carry the risk.

[...]

Mr Ryan's proposal to privatise and voucherise Medicare attempts to reintroduce the incentive to cut costs by dumping that risk back onto individual seniors. And the greatest risks will fall on the poorest, sickest, or least savvy elderly; they will be the ones most at risk of going uncovered. [Economist.com's Democracy in America blog, 4/5/11]

CBPP's Van De Water: Ryan's Plan Shifts “Large Health Care Costs Onto Seniors.” In an April 13 podcast, Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities (CBPP), wrote:

[T]he Ryan plan would gradually replace traditional Medicare with a system of cash-vouchers, which seniors and persons with disabilities could use to help them to purchase private health insurance coverage. While this would save the government money, it would do so by shifting large health care costs onto seniors.

The Congressional Budget Office has estimated that when this program goes into effect in 2022, a typical 65-year-old, who would now be in the new system, would have to pay about $12,000 out-of-pocket for his or her health care spending rather than just about $6,000 as would be the case if traditional Medicare were to continue.

I might add that these costs would continue to rise even more in later years because the value of the vouchers would gradually shrink as years go by in comparison to the rising costs of health coverage. [CBPP, 4/13/11]