GOP presidential candidate took a stab at explaining his Medicare plan yesterday. It was short on details, and somewhat confusing. A lot of the confusion comes from conflating the Romney plan with the Ryan plans (there are at least two of them for Medicare). In the end, the campaign is left with providing the seven key points they have had listed on their site for a while now. Ginger Gibson sums them up for us. She also notes some of the problems.
• Nothing would change for current Medicare recipients or those about to retire.
• The program would switch to a voucher program that allows recipients to buy their own health insurance.
• Romney would require all insurance companies to offer coverage comparable to current Medicare coverage.
• Any senior who buys a more expensive plan would have to do so out-of-pocket. And anyone who buys a cheaper plan could use the rest of the voucher for other medical expenses.
• The government will continue to offer Medicare as an option for purchase, like other private insurance coverage. If the government-run program costs more, seniors will have to pay the difference.
• Low-income seniors will get larger vouchers and wealthy seniors will receive smaller vouchers.
The final point, that competition will drive down the cost, is less a plan element and more of an argument in favor of the voucher structure.
What Romney’s outline doesn’t include is a total-savings estimate, cost estimates for changing the plan, an age cutoff for when it would be implemented, how the vouchers would be administered, how the government-controlled plan would be administered or what effect his proposals would have on the deficit or current budget.
The questions posed by Gibson are good ones, but she misses a couple of the most important ones. Medicare Advantage, the privately run arm of Medicare, was formed with the idea that the private sector would be more efficient and reduce costs. Instead, Medicare Advantage programs cost, on average, 14% more than does standard Medicare. Of course the numbers are actually even worse, since the sickest patients remain in standard Medicare. So, if we adopt the Romney plan, what happens if history is repeated? With Medicare as the public option (the irony), will everyone end up in standard Medicare anyway? Do we pay the higher costs for the private options and see Medicare costs rise faster?
The Ryan plan, at least one of them, sets a cap on Medicare spending at GDP plus 0.5%. If Romney adopts this from the Ryan plan, how is it implemented? Are all vouchers reduced in value? More means testing? Reduced payments to providers?
Mitt Romney has been running for president since 2008. He has a reputation for competence and business acumen. Medicare is the single largest cause of our future debt, an issue the GOP claims is important. I expect better answers on this important topic.