Monday, June 06, 2011

Paul Ryan's Plan Will Ration Health Care by Ability to Pay Even More Than It Already Is.

Even today, the elderly have considerable out of pocket expense when it comes to health care. I know my retired parents pay $800 per month (I think...I just know it's a hell of a lot more than they should have to pay) for health care insurance, in addition to Medicare coverage. And, now Medicare (government sponsored single payer health care system for the approximately 47 million elderly) may be eliminated entirely if deficit-cutting, supply-sider, Representative Paul Ryan, chairman of the House Budget Committee, gets his way.

Ryan's plan relies on vouchers - which the federal contribution will be pegged to the Consumer Price Index (CPI) - that future retirees can use to buy private health insurance. Here's the thing: the inflation rate of healthcare expenses (and private insurance costs) rises three times faster than the CPI.  The Congressional Budget Office (CBO) estimates that by 2030, retirees will pay 68%  out of pocket, compared with the 25% the elderly  pay now.  Not to mention, those retiring in  ten years, will- if the current trend continues - have very little to no savings at all.

We often hear that demographics, or the growth of the aging population is what's responsible for driving health care costs sky-high.  Not so, says health care economist Uwe Reinhardt of Princeton University. He claims that the growth in the aging population (occurs at a glacial pace) only accounts for one-half of one percent of the 6% inflation rate of healthcare expenses (and private insurance costs). So, what drives the cost?
The supply side of the health care system. That's right, the private sector (physicians, especially specialists, hospitals, pharmaceuticals, etc.), who continue to increase prices. Americans pay twice the amount for everything from doctor visits to medicine, than every other country.

Now Ryan will lie to tell  you that he has the same type of health care insurance. This is not true, as his plan is not pegged to the CPI; the federal contributions in his plan keep pace with the inflation rate of healthcare costs.

On the critical metric of whether the Ryan plan would reduce total health-care costs [] the CBO conclusion is shocking: The plan would not only fail to decrease health-care costs per beneficiary, it would increase them — by an astonishingly large amount that grows over time. By 2030, health spending on the typical beneficiary would be more than 40 percent higher under the Ryan plan than under existing Medicare, according to the CBO report.

....How could this possibly be, when the point of reform is to reduce costs? The CBO points to two factors: Private plans have higher administrative costs than the federal Medicare program, and less negotiating leverage with providers-- Peter Orszag


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