Although many things about Sen. Paul Ryan’s budget proposal trouble me, one of the things that troubles me most is Ryan’s belief about how Medicare can be transformed.
Now that Ryan has been named Mitt Romney’s running mate in the 2012 US election, this Washington Post Fact Checker article, and the material it links to regarding Paul Ryan’s budget, provide some insight into the Ryan budget.
Remember, this is the budget that Romney earlier said he would sign if he were president and it landed on his desk.
Regarding healthcare, it’s important to remember that on Day One of the Romney presidency, Romney has said, he would repeal the Affordable Care Act. So all the requirements and provisions of this Act, such as those preventing insurance companies from denying coverage based on pre-existing conditions that applicants may have, would be gone.
Very clearly, the Ryan budget ends Medicare as we have known it since 1965, when it was enacted. The second version of the Ryan plan (which has been around for several months) replaces the Medicare program with a voucher program, as the first version did, but now the second version allows retired people to elect to stay with the traditional Medicare program if they wish. It should be noted that although the Ryan plan is filled with benefits, it is only going to be available to people who in 2012 are 55 and over, and the new options in this bold and courageous plan would not be available until the year 2022.
If senior citizens decline traditional Medicare, they would be given a voucher for a certain amount of money (set in the second version of his budget at $11,000 — in the original Ryan budget the voucher was for $8,000). Citizens would be expected to use this voucher to go onto a healthcare exchange and purchase insurance at an insurance exchange. However, the existence of these exchanges, virtual marketplaces where people could choose from a variety of insurance plans, is in question. Health insurance exchanges are supposed to be created by states as a requirement of the Affordable Care Act, which Romney vowed to repeal on Day One of his presidency, if elected. The fuzziness over the existence of exchanges has not been explained by Ryan.
Let’s start with the first potential problem of implementing the Medicare reform Romney and Ryan propose: impact of pre-existing health conditions. Unlike people in their 20s or 30s, most senior citizens would have pre-existing conditions that could make it very difficult, if not impossible for them to get coverage from any insurance company. So, even with a voucher, would senior citizens potentially be denied insurance due to pre-existing conditions? And if they had pre-existing conditions, how much higher would their insurance premiums be? The Ryan plan does not answer this question.
Those senior citizens who might be healthy enough and fortunate enough to be able to get coverage would very likely not be able to afford it, even with the dollars provided through the voucher program. This is because someone in his 70s, even without pre-existing conditions, would be more likely to develop a serious illness, and this would mean that the premium rates charged by insurance for coverage would be so high that only very wealthy senior citizens would be able to afford to pay the premiums for such insurance. Numerous calculations have determined that the there would be a gap of at least $6,400 between what the voucher would cover and the cost of the insurance premiums available in the plans, which Ryan claims would be the same health insurance plans available to members of Congress. Many details need to be worked out on this.
My biggest question is this: If the Romney-Ryan plan for Medicare is so filled with benefits, why do Romney-Ryan not want it to be implemented until 2022 (6 years after Romney-Ryan would be out of office, if elected to one four-year term in 2012; 2 years out of office if they were fortunate enough to be elected to two terms)? If this plan is such a great plan, why not make it available to senior citizens, those currently on Medicare, sooner? Surely it could not take 10 years to put the administrative infrastructure in place.