CBO Says GOP Medicare Plan Would Double The Cost Of Health Care For Seniors

By Rick Ungar for Forbes

Despite Rep. Paul Ryan’s suggestion that the independent and bi-partisan Congressional Budget Office had signed off on the numbers he has presented in his 2012 budget proposal, it is now emerging that Rep. Ryan has failed to tell us the entire story.

One of the key provisions contained in the Ryan created GOP budget proposal – the budget that that makes the current, 2011 budgetary battle threatening to shut down the government in about 30 hours look like a mild disagreement between friends– is a plan to privatize Medicare, the government single-payer program that pays for care for our seniors and disabled Americans.

While Ryan promised that the plan would reign in the out-of-control costs of health care and save everyone money, the CBO has a different take on the subject – one that mirrors what was written on this blog a few days ago.

As I noted in “GOP To Propose Obamacare For Seniors”, private health insurance companies are simply more expensive to operate than government run Medicare, not to mention the importance of profit in the private system that does not exist in a government program. Accordingly, there is simply no way privatizing senior health care can cost us less.

But because commercial insurers cost more to run than government plans, the Wisconsin Republican’s (Rep. Ryan) proposal to privatize Medicare starting in 2022 would actually spark a dramatic increase in how much the nation spends on healthcare for the elderly, according to an independent analysis by the nonpartisan Congressional Budget Office.

Via Los Angeles Times

How much of an increase?

Accordingly to the CBO estimates, the program would result in seniors paying twice as much for their care – a sum that would total more than $12,510 a year.

Here’s how the CBO seeing it going –

The GOP proposal, which would begin in 2022, involves providing a ‘voucher’ – or as Ryan likes to call it, ‘premium support’ – to seniors to help pay for their health insurance. The average American would receive a check for $8,000, representing roughly what the CBO estimates Medicare would have to fork out for the average beneficiary in 2022. In addition to the government’s costs, the CBO estimates that seniors, in 2022, would lay out about $6,150.00 in out-of-pocket costs in the Medicare system. That totals an average cost of health care for participating seniors, in 2022, to be $14,770.

Under the GOP privatization plan, the cost to purchase the health insurance policy would cost about $20,520 per year – leaving the seniors out of pocket in the amount of $12,510 or more than twice what they would pay in 2022 should the Medicare system we currently have continue.

And we’re not done yet.

By adding seniors into the private insurance market, the total cost of health insurance would be made to go higher – for everybody.

How did Rep. Ryan respond to these rather remarkable disclosures?

The Los Angeles Times reports that the Congressman’s office failed to respond to repeated requests for comment – just as his office has failed to respond to my own efforts for a reaction.

So, how in the world would the Republicans justify such a proposal that not only creates a financial nightmare for seniors but cost us all more in the process?

Their traditional response is that by allowing the free-market to work in medicine, everything will take care of itself.

As discussed on this page many times – and by most leading health care economists in the country- the free market does not work in health care because health care is not your typical commodity.

When a patient needs heart surgery, he or she is not going shopping for a bargain price as they might do when purchasing a television set. That patient doesn’t have the luxury of putting off the purchase until later in the year when the prices come down and getting a deal pales in comparison to getting the best surgeon you can find to turn off your heart while it is being fixed.

As anyone who has ever been in this position knows all too well, you don’t pick the surgeon you are entrusting to save your life based on price – you pick that person based on quality and history of success.

Now, I know all too well that many of you can’t wait to remind me that CBO numbers can’t be trusted.

Maybe – maybe not.

But then, you certainly trusted them well enough when the GOP was flouting the CBO estimates as proof of the unacceptably high costs of Obamacare.

You don’t get to pick and choose which estimates you like and which ones you don’t like. So, you have to ask yourself – exactly who is coming out ahead in the GOP proposal?

Certainly not the taxpayers or the nation’s elderly. That only leaves one possible beneficiary of the Republican plan.

Insurance companies.

Why am I not surprised?

1 Comment

  1. Robert Calloway on April 11, 2011 at 2:49 pm

    It is true, the Republican plan is: If you get sick, die quick, or give us everything you worked your entire life for, and then die. It is understandable how the revolving door in politics makes this work.
    You get elected with the support of these powerful players, you do their bidding, and when you retire or get defeated they give you a high paying job lobbying for their interests.