Saturday, October 27, 2012

Medicare Vouchers Raise Costs For Most Seniors

By    Justin Acuff     
    Mitt Romney and Paul Ryan have suggested a ‘voucher program’ as part of their budget plan to save costs on Medicare. They claim that giving seniors a subsidized amount of money to go buy insurance will introduce capitalist competition into the healthcare field which will drive healthcare costs down as well as save the government money. This is, of course, in contrast to Obama’s plan, which is to make healthy insurance legally mandated and make healthy, young people get it too (on their parents’ policy until they are 26) to drive down the cost of premiums.

Except that a new study out recently (October 15) says that Romney and Ryan’s claims aren’t true and that Medicare vouchers raise costs for most seniors. The study was performed by the non-partisan Henry J. Kaiser Family Foundation, an organization that describes itself as a “non-partisan source of facts and analysis for policymakers, the media, the health care community, and the general public.”

Talking Points Memo‘s Sahil Kapur reports on the study, saying:

The Kaiser Family Foundation delved into the likely impact of transforming Medicare into a “premium support” system. Under that approach, the federal government would provide seniors a subsidy to shop for insurance plans from a menu of competing private plans and traditional Medicare. That subsidy would be capped at the value of the second least costly premium in the marketplace.

Using 2010 data as a model, Kaiser’s study found that among seniors who chose to remain in traditional Medicare, more than half would have paid higher premiums. Just under half would have paid the same. That would’ve yielded an average premium hike of $720 annually for seniors who chose to remain in traditional Medicare.

The study has pros and cons for either side of this issue. For the anti-Romney/Ryan crowd, the study is easy to quote as a nonpartisan damning of the voucher program. While it does show that the voucher program would have cost more than traditional Medicare in 2010, that’s about all it does. It is very difficult — as the authors pointed out — to definitively say whether or not that would affect the future of Medicare, as Romney/Ryan’s plan wouldn’t go into effect until 2023.

The Romney campaign was quick to point this out, as TPM continues,

The Romney campaign quickly moved to dismiss the significance of the study.

“As the authors stress, this is not a study of the Romney-Ryan plan,” Romney spokeswoman Andrea Saul told TPM. “Our plan would always provide future beneficiaries guaranteed coverage options with no increase in out-of-pocket costs from today’s Medicare.”

The study nevertheless concludes that, taking a broadly similar approach, the majority of seniors would have paid higher premiums in 2010 than they did under Medicare in its existing form.

While beneficiaries might not have the cost of insurance go up, there is an excellent chance they will have to switch to plans with lower benefits. Romney’s plan doesn’t allow for the inevitable increase in healthcare costs over time and will likely result in higher and higher spending out-of-pocket per year if it is implemented.