Saturday, December 17, 2011

It ain't broke. Let's fix it.

Sometimes you have to ask "are people actually this stupid?" And then, of course, the obvious answer comes back - "yes. Yes, they are."

Paul Ryan's plan to scrap Medicare has proven to be just massively unpopular with the average American (especially among those who don't watch Fox "News," or who actually use Medicare themselves). So now, of course, they need to get the focus back to Medicare "reform."

One of the chief problems with Medicare, from the industry's view, is that the government can just set prices and the industry has to go along with it (as opposed to raising prices just because they can). That is, in fact, the primary complaint in most anti-Medicare rants (at least the ones that don't devolve into "death panels"): "the game is rigged against private insurers!"

So, somebody went out and found themselves a "Democratic" Senator from Oregon, Ron Wyden, and convinced him to co-sponsor a new plan to "reform" Medicare (where "reform" is defined as "gut and destroy").

Let's see how quickly you can spot the landmines built into this plan:
Under the proposal, known as premium support, Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.

Congress would establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide benefits of the same or greater value. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.

In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one percentage point — a slower rate of increase than Medicare has historically experienced.

To stay under the limit, Congress could cut payments to providers and suppliers responsible for the overspending and could increase Medicare premiums for high-income beneficiaries, the lawmakers said.
You got that? The problem is that Medicare is usually the cheapest plan around. So, first off, you make it so that it has to be, by law, the second cheapest plan around. That's step one.

Then, you force the government to funnel some of the Medicare money to the private insurers (a business that is traditionally astonishingly lucrative for the people who run it), leaving less money available for the Medicare program itself.

Then, you put spending caps on Medicare and increase some of the Medicare premiums, making the program less flexible, less able to respond to market pressures, and (just by the way) less popular among the people whose premiums just went up.

And those are just the obvious problems: this plan basically says "well, the game is rigged toward the government. The only way to fix that is to rig it in the other direction."

Now, just for fun, let's put our tinfoil hats on for just a second. Can you see any way that this system could be manipulated by the healthcare industry? Is there, maybe, a simple backdoor that somebody could sneak through to kill off Medicare entirely? (You know, pretty much what Big Pharma and the GOP have been trying to do for decades?)

Try this idea on for size. A couple of the health insurance companies (not working together! Oh, no!) set up some brand-new private insurance plans to "compete" with Medicare. And one of them is obviously cheaper than the rest.

(Can these plans lose money in the long run? Of course they can! In order to be a growth industry, you don't just look at short-term losses - you have to figure out long-term gains!)

And if you advertise that new plan like mad, people will change over to it. Meaning that there are, by definition, less people in Medicare. And less money coming in.

Remember, all the big insurance companies are already getting Medicare money directly from government subsidies under the new plan. And the government is still paying for the remaining Medicare patients.

So the money is still going out under the current plan, and damned little is coming in. And the industry can just quietly poke Congress in the ribs and say "Look! We can do it just as cheaply. And save the government money in the process. What do you think we should do about this? Oh, and would you like more Cabernet?"

But that's just paranoia, right there. Right? There's no way that could ever happen.

Is there?

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