60 Plus Association Ad Lies About The GOP Medicare Plan, Again

June 06, 2011 5:19 pm ET

With a new web ad, 60 Plus Association is peddling the same lies about the Republican Medicare plan as it's done before. This time they are claiming the GOP plan fulfills the "promise" made to seniors and that it will "save Medicare." But the fact is the GOP plan for Medicare breaks the promise to seniors of a guaranteed benefit by replacing Medicare with an underfunded voucher system. Additionally, despite 60 Plus' claim, the GOP plan does not provide seniors with the same care members of Congress receive because it does not adjust for rising health care costs. And even though they say that there is "no disruption in benefits to those in or near retirement," the GOP Medicare plan negatively impacts benefits for current seniors by reopening the prescription drug "donut hole" and by eliminating preventative services provided by the Affordable Care.

60 Plus Association: "A Promise Is A Promise"

A promise is a promise. That's what Medicare is all about. But Washington politicians have broken that promise, bankrupting Medicare while telling us not to worry. Empty promises don't work. We must save Medicare. Make it secure and even stronger for future generations. How? By cutting waste and giving future seniors the same choices members of Congress have, while ensuring there's no disruption in benefits to those in or near retirement. After all, a promise is a promise. Tell Congress, no more empty promises. Support the Republican plan to save Medicare.

The GOP Medicare Plan Doesn't "Save" Medicare...

Wall Street Journal: GOP Plan "Essentially End[s] Medicare" For Americans Under 55 Years Old. As reported by the Wall Street Journal: "The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program's soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016. Mr. Ryan's proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a 'premium support' system." [Wall Street Journal4/4/11]

Hiltzik: By Not Addressing Cost Problems In Health Care System, GOP Medicare Plan Doesn't "Cure" Medicare. Los Angeles Times columnist Michael Hiltzik wrote:

Medicare's ills are entwined with our national system of healthcare — how it's used and how it's distributed. You're not going to make a dent in the problem unless you change the underlying system. Ryan's approach doesn't lay a finger on that system, except to magnify its inefficiencies and expense.

Not that his solution to the problem of a larger federal bill for Medicare services isn't simple: He just transfers more of the expense to elderly enrollees. He also proposes to place more of the program in the hands of private insurance companies, which have higher overhead costs than traditional Medicare. The bipartisan Congressional Budget Office has found that by 2022 the costs under private plans would be as much as 34% higher than equivalent services under traditional Medicare.

So Ryan's double whammy of charging seniors a larger share of a more expensive program doesn't really "cure" Medicare, any more than one cures a case of tennis elbow by lopping the offending arm off at the shoulder. [Los Angeles Times, 6/5/11, emphasis added]

...It Replaces Medicare With A Voucher System, Doubling Out-Of-Pocket Expenses For Future Seniors  

CBO: Under The GOP Budget, "Most Elderly People Would Pay More For Their Health Care Than They Would Pay Under The Current Medicare System." According to the Congressional Budget Office: "Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary's spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary's spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario." [CBO.gov, 4/5/11]

Currently, Medicare Part A Pays Hospital Bills For Americans 65 And Older Who Paid Social Security Taxes For At Least 10 Years. From CNNMoney: "Medicare Part A provides coverage if you're hospitalized. This coverage is 'free' — meaning you pay no premiums — if you paid into the Social Security pool for at least 10 years [and are over age 65 or disabled]." [CNNMoney, accessed 4/24/11]

  • Medicare Also Gives Seniors The Option To Purchase Additional Coverage For Things Like Doctor Visits And Prescription Drugs. From MarketWatch: "Medicare Part A, which covers hospital stays and services, is premium-free for most people. But that's where the freebies end. Traditional Medicare involves a matrix of premiums, co-payments, coinsurance and deductibles. For instance, you'll have to meet a deductible — $1,132 for 2011 — before Part A coverage kicks in for hospital stays of up to 60 days. For beneficiaries new to Medicare this year, the average premium for Medicare Part B is $115.40 a month. But if you earn more than $85,000 if you're single, or $170,000 for a married couple filing jointly, you'll pay more. And starting this year, high earners with Part D prescription-drug plans will face a surcharge ranging from $12 to $69.10 per month, depending on income." [MarketWatch, 4/24/11, via Mail Tribune]

The GOP Budget Turns Medicare Into A Voucher System. From "The Path to Prosperity":

Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11, emphasis added]

Cato Institute Senior Fellow: Republican Plan Replaces Medicare With A Voucher System. In a New York Post op-ed about the "Path to Prosperity," Cato Institute senior fellow Michael Tanner wrote: "Those getting close to retirement will also still go into Medicare, just as they would have before. But beginning in 2022, people who are younger than 55 today will begin to transition to a new system. Instead of going into Medicare at age 65, they will receive a voucher from the US government to help them purchase private health insurance. Initially that voucher is expected to be for roughly $15,000 per recipient. Lower income seniors and those with higher health care costs because of illness will receive a bigger subsidy. Seniors can use these vouchers, combined with whatever they wish to spend of their own money, to choose an insurance plan that has a cost and mix of benefits that best meets their needs. Instead of a one size fits all system, seniors will have many more choices than they have today." [Tanner Op-Ed, 4/10/11, emphasis added, via Cato.org]

In 2022, A Typical 65-Year-Old Would Be Paying Approximately Double Compared To Current Levels. The Center on Budget and Policy Priorities prepared a graphic comparing health care spending for a typical 65-year-old under the current system to the same spending under the Republican budget:

[CBPP.org, 4/7/11]

CEPR: 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 in 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. 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.org, 4/6/11, emphasis added, all parentheses original, internal citations removed for clarity]

If Medical Costs Continued To Increase Faster Than Voucher Values, "The Average Retiree Would Be More Than $50,000 In The Hole." According to an op-ed in the Huffington Post by R.J. Eskow, Senior Fellow with The Campaign For America's Future:

Even if the voucher is given full Medicare value in Year One (which we question), things start to get really bad after that. If medical costs continued to increase at 9% each year, which isn't at all impossible, and the voucher's value continued to increase at 5%, here's what would happen 10 years later using my figures:

Ryan Budget

By 2031, the cost of Medicare-equivalent coverage would be $73,000, and the voucher would be worth $18,000. By my calculation, the average retiree would be more than $50,000 in the hole. [Huffington Post4/6/11, emphasis original]

The GOP Medicare Plan Isn't Like What Members Of Congress Get

Value Of Federal Employees' Benefits Adjusts According To Health Care Market, But Ryan Plan For Medicare Uses Fixed Voucher Amounts. From Wonk Room: "It's the same rhetoric that Democrats used to sell the health care exchanges that are part of the Affordable Care Act, but in Ryan's case the comparison doesn't hold up. Ryan is constraining the rate of growth in Medicare by offering seniors a defined contribution, regardless of the rate of growth in health care costs. The federal government's contribution in the FEHBP program, by contrast, reflects actual increases in premium levels. As the Office of Personnel Management describes it, the FEHBP formula 'is known as the 'Fair Share' formula because it will maintain a consistent level of Government contributions, as a percentage of total program costs, regardless of which health plan enrollees elect.' The difference is that Ryan's proposal provides seniors with a set amount of money that, in order to reach the kind of savings he's advertising, would have to depreciates every successive year — even as health care costs increase." [Wonk Room, 4/5/11, emphasis added]

PolitiFact: There Are More Differences Than Similarities Between Medicare Proposal And Federal Health Care Benefit. According to a PolitiFact analysis of a similar claim from Rep. Mike Pence (R-IN):

Now let's look at how whether proposal looks like what members of Congress can buy.

  • How the plan is like what members of Congress get. We contacted Pence's office to ask about how the Ryan proposal is like what members of Congress get, and they pointed us to the fact that Medicare plans from private insurers will be required to comply with a benefits standard set by the U.S. Office of Personnel Management, as do plans that cover members of Congress.

We should also note that seniors would be able to compare different plans and select from different insurance options, as members of Congress do. The government would pay part of premiums, as it does for members of Congress.

  • How the plan is not like what members of Congress get. First, the plans would be created specifically for Medicare beneficiaries on newly created Medicare health insurance exchanges. (Exchanges are virtual marketplaces where people can shop for insurance.)

Second, as Van Hollen pointed out, members of Congress are protected somewhat when health insurance companies raise their rates, through a formula he mentioned known as "Fair Share." Generally speaking, the government pays for 75 percent of the average of the health insurance plans it offers. If the overall plans increase in price, the government still pays 75 percent.

Federal support for premiums in Ryan's plan, though, would not keep pace with medical inflation. Premium support instead would be pegged to the consumer price index, which historically lags health care costs.

Our final point on how the plans differ may seem obvious to some, but we feel it's important to mention: Members of Congress receive employer-based insurance. By definition, that means they receive a salary to help pay for their insurance. The base pay for members of Congress is currently $174,000.

Medicare beneficiaries, on the other hand, tend to make a lot less money, because most of them are retired. The median income for Medicare beneficiaries was $20,644 in 2010. And only 5 percent had incomes exceeding $82,695, according to an analysis by the Kaiser Family Foundation. [PolitiFact.com, 4/13/11, emphasis original]

GOP Medicare Plan Does Disrupt Benefits For Current Seniors By Reopening The "Donut Hole" And Eliminating Current Preventative Services...

"Path To Prosperity" Reopens Medicare "Doughnut Hole," Forcing Millions Of Seniors To Pay Higher Drug Costs "Immediately." From the National Journal: "[T]he GOP is doubling down on the idea that today's seniors won't be affected. That's partly true. Ryan's plan to convert Medicare into a limited insurance subsidy, the most controversial aspect of the budget, wouldn't take effect until 2022.But the proposal would also repeal last year's health care law, which means reopening a coverage gap in Medicare's prescription-drug benefit that the statute closed. The gap, commonly called the "doughnut hole," requires seniors to pay 100 percent of any prescription costs after the annual total reaches $2,840 and until it hits $4,550. Those who spend more or less have at least three-quarters of the costs covered. Under the 2010 health law, Medicare will pay 7 percent of the cost of generic drugs and 50 percent on name-brand pharmaceuticals; by 2020, the doughnut hole will be closed. If Congress were to pass Ryan's plan and repeal the law, as House Republicans want, the 3 million to 4 million seniors left in the doughnut hole each year would immediately face significant out-of-pocket costs." [National Journal6/3/11, emphasis added]

GOP Budget Would Strip Current Seniors Of Access To Preventive Care. According to the National Journal: "If Congress were to pass Ryan's plan and repeal the law, as House Republicans want, the 3 million to 4 million seniors left in the doughnut hole each year would immediately face significant out-of-pocket costs. They and all other Medicare beneficiaries would also lose access to a host of preventative-care benefits in the health care law, including free wellness visits to physicians, mammograms, colonoscopies, and programs to help smokers quit." [National Journal6/2/11]

  • More Than 150,000 Medicare Beneficiaries Received A Free Annual Wellness Visit By March 2011. From a March 16, 2011, Health and Human Services news release: "Today, the Department of Health and Human Services (HHS) released a new report showing that in less than two months, more than 150,000 seniors and others with Medicare have received an annual wellness visit. This is a preventive benefit now covered by Medicare free of charge when obtained by a participating health care professional, thanks to the Affordable Care Act, along with many other recommended preventive services. ... Many more people with Medicare are expected to receive annual wellness visits and other recommended preventive services thanks to the Affordable Care Act." [HHS.gov, 3/16/11]

...And By Encouraging Healthy Seniors To Leave Medicare, Weakening The Program For The Most Vulnerable

Once Republican Voucher Program Begins In 2022, Healthy Seniors Still On "Traditional" Medicare Would Have Incentive To Leave — Endangering The Program For Less-Healthy Beneficiaries. From the National Journal: "The policies in the House GOP budget, if enacted, would begin affecting millions of seniors almost immediately by increasing their costs for prescription drugs and probably long-term care. Further, Medicare costs could rise over time if healthier seniors choose to abandon the traditional benefit program. [...] The plan to grandfather traditional Medicare for those older than 55 could also have negative consequences for current seniors: In 2022, when the limited-subsidy program would be introduced, seniors who qualified for traditional Medicare would be allowed to switch to the new program. If healthier or younger beneficiaries make the change to lower their out-of-pocket costs, those still participating in Medicare would be part of an insurance pool that is less healthy and more expensive. To cover those higher per-person costs, Medicare might well be forced to either raise premiums or limit reimbursements to health care providers — which could prompt many to stop taking Medicare patients." [National Journal6/3/11]

Centrist Think Tank: Despite Republican Claims, "Current Beneficiaries Are Not Protected In The Ryan Budget." According to a report from Third Way by David B. Kendall, Senior Fellow for Health and Fiscal Policy and Ryan McConaghy, Director of the Economic Program:

Despite promises to the contrary, current beneficiaries are not protected in the Ryan budget. Under the Republican proposal, traditional Medicare would quickly become second-class medicine. It would "wither on the vine," as then-House Speaker Newt Gingrich described a similar GOP effort in 1995.

The traditional Medicare plan, which covers three-fourths of today's beneficiaries, relies on its huge size to keep costs down. Doctors and hospitals are not required to participate in it, but they have little choice if they wish to treat any seniors, who are the nation's biggest health care consumers.

Fewer doctors would participate in the traditional Medicare plan if there were an alternative. The traditional plan pays physicians about 20% less than private health insurance plans. Today, that is essentially a discount for the large volume of Medicare patients. Under the Ryan budget, it would become a reason for doctors to leave the traditional plan.

By 2030, only 55% of Medicare beneficiaries would still be eligible for traditional Medicare according CBO. Actual enrollment would be less than half of Medicare beneficiaries because many seniors would continue to enroll in private health care coverage under Medicare Advantage. By 2040, traditional Medicare would have only about 20% of Medicare beneficiaries. [ThirdWay.org, 4/14/11, internal citations removed for clarity, emphasis added]

The GOP Budget Plan's Cuts To Medicaid Would Also Affect Seniors Immediately

9 Million Seniors Qualify For Medicaid As Well As Medicare. From the National Journal: "Some 9 million seniors qualify for both Medicare and Medicaid benefits, and about two-thirds of all nursing-home residents are covered by Medicaid." [National Journal, 6/3/11]

GOP Budget Cuts $744 Billion From Medicaid Over The Next Decade. From the National Journal: "Perhaps more jolting, the Republican budget would cut spending on Medicaid-health care for the poor — much of which goes to long-term care for the elderly. [...] The GOP budget proposes cutting some $744 billion from Medicaid over 10 years by turning the system into block grants that limit federal contributions and give states more choice in structuring benefits. No one knows exactly which Medicaid services states would choose to cut back, but senior citizens account for a disproportionate share of Medicaid outlays and would almost certainly bear some of the burden." [National Journal, 6/3/11, emphasis added]

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