CNN's Sanjay Gupta claimed that the proposed changes to Medicare that Congressman Paul Ryan has offered would allow seniors to choose between “a voucher” system and “traditional Medicare,” while keeping the system affordable. In fact, experts say the Ryan plan would threaten Medicare's long-term viability and potentially would increase seniors' medical costs by thousands of dollars.
CNN's Gupta: Ryan Plan Will Give Future Seniors Option To Retain “Traditional Medicare”
Sanjay Gupta Claimed Ryan's Proposal Will Give Future Seniors A Choice Between Voucher System And Traditional Medicare. On the September 28 edition of CNN's Early Start, CNN chief medical correspondent Sanjay Gupta reported on the differences between the Ryan Medicare plan and the Affordable Care Act and claimed that the Ryan plan would offer those under 55 “the option of getting a voucher to purchase private insurance, or they could stick with traditional Medicare”:
GUPTA: Romney and his running mate Paul Ryan proposed to cap malpractice insurance, cut Medicaid by $810 billion dollars over the next 10 years, give states more control over their Medicaid funds, overhaul Medicare. The overhaul? People now younger than 55, when they reach retirement, would have the option of getting a voucher to purchase private insurance. Or, they could stick with traditional Medicare. [CNN, Early Start, 9/28/12]
But Experts Say Ryan's Plan Threatens Medicare's Long-Term Viability
CBPP: Ryan's Promise To Ensure “Traditional Medicare Remains An Option” Cannot Be Kept. Paul Van de Water, an economist and senior fellow at the Center for Budget and Policy Priorities, wrote in March that Congressman Paul Ryan's plans for Medicare in his latest budget could lead to the unraveling of traditional Medicare:
Chairman Ryan claims that his proposal “ensur[es] that traditional Medicare remains an option.” Unfortunately, that's not the case. Under premium support, traditional Medicare would tend to attract a less healthy pool of enrollees, while private plans would attract healthier enrollees (as occurs today with Medicare and private Medicare Advantage plans). Although the proposal calls for “risk adjusting” payments to health plans -- that is, adjusting them to reflect the average health status of their enrollees -- the risk adjustment process is highly imperfect and captures only part of the differences in costs across plans that stem from differences in the health of enrollees.
Inadequate risk adjustment would mean that traditional Medicare would be only partially compensated for its higher-cost enrollees, which would force Medicare to raise beneficiary premiums to make up the difference. The higher premiums would lead more of Medicare's healthier enrollees to abandon it for private plans, very possibly setting off a spiral of rising premium costs and falling enrollment for traditional Medicare. Over time, traditional Medicare would become less financially viable and could unravel -- not because it was less efficient than the private plans, but because it was competing on an unlevel playing field in which private plans captured the healthier beneficiaries and incurred lower costs as a result. Ryan also would allow private plans to tailor their benefit packages to attract healthier beneficiaries and deter sicker ones, which only makes this outcome more likely. [Center on Budget and Policy Priorities, 3/28/12]
CBPP: Voucher Systems That Include Medicare Option Could “Threaten Traditional Medicare's Long-Term Viability.” In a September 2011 report titled, “Converting Medicare to Premium Support Would Likely Lead to Two-Tier Health Care System,” CBPP explained that under a “premium support” system such as the one in the Ryan plan that was passed by the House in April 2011, “inadequate risk adjustment” could lead to healthier seniors abandoning traditional Medicare for private plans. The report explained that could leave only the less healthy in the traditional Medicare program, which could “drive up its costs and threaten traditional Medicare's long-term viability.” [Center on Budget and Policy Priorities, 9/26/11]
Brookings Institute: Financing For Ryan Plan Would “Throw Into Doubt The Very Survival Of The Program.” Brookings Institute senior fellow Henry Aaron evaluated the Ryan Medicare plan and concluded that “the financing for traditional Medicare would become progressively less adequate, throwing into doubt the very survival of the program”:
The claim that the Ryan plan leaves American's over age 55 unaffected is untrue because it is likely to raise the amount they have to pay out-of-pocket for insurance. The reason is technical, but easy to understand. The premium for those who stay in traditional Medicare under the Ryan plan would be calculated as under current law, but the average cost of serving those who remain in traditional Medicare would go up as private insurance companies market selectively to those with relatively low anticipated costs.
The average cost of those who remain in traditional Medicare would therefore increase. As a result of this gap, the financing for traditional Medicare would become progressively less adequate, throwing into doubt the very survival of the program. [Brookings Institute, 8/20/12]
CNN Money: Ryan Plan “Won't Look Much Like The Medicare Of Today.” In an article about the Ryan Medicare plan, CNN Money explained that while “Mitt Romney and Paul Ryan say senior citizens could opt to stay in traditional Medicare,” “it won't look much like the Medicare of today.” The article continued: “Instead, experts say it could wind up being more expensive and containing fewer doctors, hospitals and other providers.” [CNN Money, 8/18/12]
CNN's Gupta Touted Ryan's Claim That His Plan Will Ensure “Affordable Medicare Coverage”
Gupta Amplified Ryan's Claim That His Plan Will “Guarantee” That “Seniors Can Always Afford Medicare Coverage.” During the segment, although Gupta pointed out that with the Republican repeal of the health care law, seniors would pay more for prescription drug benefits under a Ryan Medicare plan, he nevertheless touted Ryan's claim that his plan ensures “seniors can always afford Medicare coverage”:
RYAN [video]: This financial support system is designed to guarantee that seniors can always afford Medicare coverage. No exceptions.
GUPTA: While the repeal of Obamacare would get rid of the prescription drug benefit to seniors, Romney doesn't want to take out all of the law's provisions. [CNN, Early Start, 9/28/12]
In Fact, Ryan's Plan Would Drive Up Costs For Seniors
Public Policy Professor: Ryan's Plan Will Force Seniors To “Choose Between Paying For Better Coverage And Having More Money For Food.” From an ABCNews.com fact check:
Even if Ryan's plan isn't a “cut,” Ted Marmor, professor emeritus of public policy and management at Yale School of Management, and [Georgetown University professor of public policy Judy] Feder are worried Ryan's plan will burden Medicare beneficiaries by giving the government a smaller role in American social affairs.
“What Ryan is trying to do, and what I think more orthodox free market types have at the back of their minds is the view that medical care is actually just like a lot of other consumer services,” Marmor said, but it's not.
He said providing Medicare vouchers to pay competing private insurance companies will shift the risk and increased costs for care from Medicare to the patient. Some patients would have to choose between paying for better coverage and having more money for food and other items.
“If the bill for the hospital turns out to be much higher than expected, and the Medicare client had opted for a larger cost-sharing plan in exchange for not paying for wider coverage, they will face much bigger bills,” Marmor said. [ABCNews.com, 8/15/12]
Bloomberg Businessweek: Ryan Voucher System “Probably Wouldn't Keep Pace With Rising Health-Care Costs.” According to Bloomberg Businessweek, “Ryan's budget would convert Medicare from a defined benefit program to a voucher system that would provide seniors with a fixed sum to buy private insurance, a sum that probably wouldn't keep pace with rising health-care costs and would therefore require seniors to pay more out of their own pocket.” [Bloomberg Businessweek, 8/13/12]
CBPP: Ryan Would Divide Health System Into “Those Who Could Afford The Care” And Others Who Could Not. Center on Budget and Policy Priorities vice president Edwin Park wrote that the “Ryan budget would divide our health system into a distinct two tiers: those who could afford the care they need would get it; many others would not.” He explained:
He would convert Medicare into a voucher to buy private insurance or traditional Medicare, and cap Medicare financing for the vouchers at levels that wouldn't keep pace with health costs. By 2050, the Congressional Budget Office says, federal funding for a 67-year-old beneficiary's health costs would be 35 percent to 42 percent lower than under current law. With vouchers growing more inadequate over time, beneficiaries would face much higher premiums and cost-sharing. Some would become uninsured; others would forgo care they couldn't afford.
He would turn Medicaid into a block grant program and give states less financing each year. States would get one-third less by 2022, which led the C.B.O. to conclude that unless states spent substantially more of their own money on Medicaid, they'd have to make substantial cuts to eligibility, benefits and/or provider payments. When Ryan proposed a similar system last year, the Urban Institute estimated states would cut 14 million to 27 million beneficiaries by 2021. [NYTimes.com, 5/7/12]