A Bad Road for Seniors

As we know from last week’s Medicare Trustees report, the Affordable Care Act will strengthen Medicare by extending the Trust Fund for 12 years -- the largest extension in history -- and cut costs for seniors.  The new law will also save Medicare $575 billion over the next ten years  and provisions of the law that are already being implemented will save $8 billion for Medicare in just the next two years alone. At the same time, the new law protects seniors’ guaranteed benefits and helps bring costs down. By 2018, seniors will save on average almost $200 per year in premiums compared to what they would have paid without the new law and the law ultimately will completely close the prescription drug donut hole.

But as we’re moving forward, cutting health care costs and protecting seniors, some in Congress want to take us back and tell seniors they are on their own. Today, Rep. Paul Ryan published an op-ed in the Washington Post on his plan to turn Medicare into a voucher program.

Under the Ryan plan, the Medicare seniors know and trust would disappear. In its place, seniors would receive a voucher to buy insurance on the private market.  Last month, former OMB Director Peter Orszag spoke about Rep. Ryan’s voucher plan and its impact on our seniors and the cost of health care:

Over time, the voucher would increase far more slowly than projected increases in health care costs, and seniors would be asked to cover the widening difference in costs… Proponents envision seniors buying high-deductible health insurance plans—insurance plans in which seniors would pay out-of-pocket for ‘regular’ medical expenses and in which insurance only covers catastrophic costs.

Unfortunately, these plans would do little if anything bring down health care costs and would leave seniors with bigger bills. As Orszag noted:

For such high-cost patients, high-deductible plans would do little to change the delivery of health care—since these patients would rapidly run through their deductibles and most of their costs are above the deductibles.

Indeed, in the context of traditional health plans, CBO concluded that universal high-deductible plans would reduce costs by only about 5 percent relative to conventionally designed PPOs—and may not reduce costs at all relative to HMOs.

And Orszag discussed how the Ryan plan would cut Medicare and put seniors at risk:

…The plan simply mechanically cuts Medicare by increasing its vouchers more slowly than health care costs.

The result is that most of the budget savings would come from simply by shifting more and more cost and risk—ultimately including catastrophic risks—onto seniors without substantially altering the course of overall health costs.

The bottom line under the Ryan plan: Costs would continue to rise, the value of benefits provided to seniors would continue to fall, and seniors would be stuck with fewer benefits and bigger bills. And, according to outside analysts, his plan would substantially increase the deficit in the medium-term.

We won’t go down Rep. Ryan’s road.

The President has stated repeatedly that we have a solemn vow to protect and strengthen Medicare. Under President Obama’s leadership we have taken historic steps to do just that. There’s more work to be done, but the President and his team are committed to protecting Medicare and ensuring seniors have the high-quality care they expect and deserve.

Stephanie Cutter is Assistant to the President for Special Projects

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