GOP Plan Replaces Medicare’s Guaranteed Benefits
with ‘Premium Support’ Payment
Budget does not address root of high Medicare costs
-rising costs in the entire health care sector
By Joe Baker, President, Medicare Rights Center
April 5, 2011 – The math of
the proposed House budget, introduced today by Budget Committee Chairman
Ryan, is really quite simple - Medicare consumers (those over 65 and
people with disabilities) pay more for health care and the federal
government pays a lot less. The proposal ends Medicare as we know it
today, replacing Medicare’s guaranteed benefits with a “premium support”
payment or voucher that consumers can use to buy private insurance.
There is no guarantee that the
subsidy or voucher would match the rate at which health care costs
increase. This means that in order to buy adequate coverage, people with
Medicare and their families will need to pay more out of pocket.
The budget does nothing to
address the root of high Medicare costs—rising costs in the entire
health care sector. It wrongly puts the burden of these growing costs
square on the backs of Medicare consumers alone, without sharing any of
the responsibilities with the pharmaceutical industry, insurance
companies or providers.
Medicare is not the problem:
Medicare spending is growing at a rate that is less than its private
insurance counterparts. Per enrollee spending in private health
insurance grew at an average annual rate of 9.3 percent per year in the
period between 1970 and 2008, compared to 8.3 percent in Medicare.
The proposal promises to give
the same coverage as members of Congress receive, but members of
Congress are in a far better position to be able to afford more
expensive health care. The average salary of a member of Congress is
over $170,000 per year, though 60 percent of Senate freshmen and 40
percent of new representatives are worth $1 million or more.
This is in stark contrast to
the Medicare population: nearly half of Medicare consumers have
household incomes of $20,000 or less per year. Things will not change
drastically for most of the next generation of Medicare consumers, half
of whom are projected to have income below about $26,400 per year,
according to the Kaiser Family Foundation.
Finally, the proposal cuts
Medicaid financing through “block grants” to states, basically capping
the federal share and forcing the states to provide additional funding
or cut benefits as costs increase. This will deal a financial blow to
those on Medicare and their families, who look to Medicaid to help pay
for nursing home, home health and other long term care needs.
Millions of people with
Medicare rely on Medicaid to help pay out-of-pocket costs associated
with Medicare, and Medicaid is currently the only government program
that provides help with long-term care costs, which can be astronomical
and financially devastating to Medicare consumers and their families who
To help Medicare consumers and
others better understand what Medicare and Medicaid mean for the people
with Medicare, the Medicare Rights Center released “Painting a Grim
Picture: Deficit-Reduction Proposals that Hurt People with Medicare,”
which provides a snapshot of the demographics of the Medicare
population, some of the more alarming deficit reduction proposals, and
how these proposals would raise costs for consumers.
In addition, the Medicare
Rights Center today released “Medicare and Medicaid: Essential Partners
for Older Americans and People with Disabilities,” which depicts through
client stories the essential role that Medicaid plays for older
Americans and people with disabilities.
Medicare Rights Center is a
national, nonprofit consumer service organization that works to ensure
access to affordable health care for older adults and people with
disabilities through counseling and advocacy, educational programs, and
public policy initiatives.