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POLITICAL CONNECTIONS

What Steele Left Out

The RNC chairman's pledge to preserve Medicare is incompatible with his party's visions of sweeping change.

Republican National Committee Chairman Michael Steele's pledge this week to "protect Medicare" might have been more convincing had it not come five months after nearly four-fifths of House Republicans voted to literally end the program as we know it for all Americans younger than 55.

They cast that vote on April 2 in support of a GOP alternative budget plan that would have converted Medicare from an open-ended entitlement that guarantees seniors virtually unlimited access to care into a voucher system that provides future retirees only a fixed sum of money to purchase private health insurance. That approach -- a variation of legislation Republicans actually passed through the House when they controlled it in 2003 -- has some advocates among health policy experts. But this longstanding GOP prescription for Medicare emphatically violates most of the six principles that Steele enshrined this week as the pillars of a Republican "Health Care Bill of Rights" for seniors.

 

Although Republicans are accusing President Obama of embarking on a "risky experiment" by pursuing Medicare cost savings to help fund universal coverage, by any measure the plan that House Republicans endorsed this spring represents a much more wrenching change in the program. "Obama is doing some fine-tuning," says John Rother, vice president for policy at AARP, the giant seniors lobby. "This [Republican plan] would be a complete revolution and would fundamentally change the character of Medicare."

In Rep. Paul Ryan's proposal, unlike the 2003 Republican plan, new retirees would not even have the option of buying into traditional fee-for-service Medicare once the voucher system is implemented.

With polls showing seniors uneasy about Obama's health care plans, Steele this week committed Republicans to six reassuring goals on Medicare. Among them were avoiding cuts in the program and ensuring that seniors can keep their current coverage. But those pledges are flatly incompatible with the Medicare agenda that Republicans have pursued for the past decade -- and reaffirmed with their vote this spring.

 

Today about four-fifths of Medicare recipients receive care under an unrestricted fee-for-service program: They go to providers for care, and the government pays most of the bills, almost no matter how high they mount. (The remaining fifth are enrolled in private health maintenance organizations.) In 1999, a commission co-chaired by House Republican Bill Thomas and Senate Democrat John Breaux proposed that Washington instead provide seniors a grant each year to purchase health insurance.

Under that approach, seniors would no longer be guaranteed open-ended payment for care, but only a government voucher to help them buy whatever insurance they could afford. The financial risk would decline for government but increase for retirees, whose coverage could vary depending on their health or wealth. In effect, the Breaux-Thomas design would have transformed Medicare from a defined-benefit program into a defined-contribution plan, the same way employers have shifted from providing guaranteed pensions to 401(k) plans in which they commit only to providing workers an annual sum to invest toward retirement.

Beyond Breaux, this vision for Medicare -- known as premium support -- never attracted much Democratic backing. But George W. Bush endorsed it as a presidential candidate in 2000 and pushed it as president. House Republicans voted in 2003 as part of the legislation creating the prescription drug benefit for seniors to transform Medicare into a premium-support system by 2010. But when the Senate balked, the final prescription bill established a six-city test of the voucher plan still due to start next year.

Rep. Paul Ryan of Wisconsin, a leading GOP fiscal thinker, revived the idea this year by inserting into the House Republican budget an especially aggressive version of premium support. Ryan proposed to maintain the existing Medicare program, which is open to seniors once they turn 65, for all current recipients and anyone else who is at least 55 today. But the bill mandated that all younger Americans, once they turn 65, would instead receive a voucher to purchase private insurance (with sicker and poorer seniors receiving larger vouchers). In Ryan's proposal, unlike the 2003 Republican plan, new retirees would not even have the option of buying into traditional fee-for-service Medicare once the voucher system is implemented; Medicare as it now exists would disappear once the last retirees still eligible for it passed away. House Republicans backed the GOP budget including that plan to phase out conventional Medicare this April by a vote of 137-38, but it was rejected amid unanimous Democratic opposition.

 

Ryan, like other proponents, argues that premium support would provide seniors "more direct control over health care decisions" while saving Washington money. But critics like Rother say that converting Medicare into a voucher would increase costs for all beneficiaries and over time force less-affluent seniors to accept lower-quality care. "It is a very dangerous idea," he says.

The virtues and risks of premium support have never been fully examined. But at the least, the GOP drive to replace Medicare with a voucher renders ridiculous Steele's pledge to maintain the program as it stands for seniors who like it that way. Far from preserving Medicare, as Steele insists, leading Republicans have repeatedly demonstrated that they want to remake it much more fundamentally than anything Obama has proposed.

rbrownstein@nationaljournal.com

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