Republicans are convinced that burnishing the public’s view of their unpopular proposal to overhaul Medicare depends on assuring today’s seniors that they won’t be affected.
“The retirees are going to be taken care of; there’s no ifs, ands, or buts about it,” House Speaker John Boehner vowed in an interview with CBS last month. The plan’s architect, Rep. Paul Ryan of Wisconsin, has said time and again that the changes wouldn’t affect anybody getting close to retirement. “We propose to not change the benefits for people above the age of 55,” Ryan, chairman of the House Budget Committee, insisted last week.
There’s only one problem with the strategy: It’s not true.
The policies in the House GOP budget, if enacted, would begin affecting millions of seniors almost immediately by increasing their costs for prescription drugs and probably long-term care. Further, Medicare costs could rise over time if healthier seniors choose to abandon the traditional benefit program.
Exploiting the fear of change is a constant in health care politics, so nearly every reformer tries to play down the dislocation inherent in plans to make the system fiscally sustainable. During his own reform push, President Obama promised citizens they could keep their existing health insurance plans if they liked them. That was not exactly true: Although the new law doesn’t eliminate the current insurance system, it does put in place new incentives that experts predict will significantly change individuals’ health care options.
Republicans capitalized on the fear of those potential changes, as well as of hundreds of billions in genuine cuts to Medicare spending that were part of last year’s law, and they won heavily in November’s midterm elections. The president’s party lost seniors by more than 20 percentage points after splitting their vote 50-50 with the GOP in the prior midterm election. This year, however, it is the Republicans’ turn to be nervous, as opinion polls and their surprising loss in a special election in upstate New York revealed voter anxiety about their plan.
In response, the GOP is doubling down on the idea that today’s seniors won’t be affected. That’s partly true. Ryan’s plan to convert Medicare into a limited insurance subsidy, the most controversial aspect of the budget, wouldn’t take effect until 2022.
But the proposal would also repeal last year’s health care law, which means reopening a coverage gap in Medicare’s prescription-drug benefit that the statute closed. The gap, commonly called the “doughnut hole,” requires seniors to pay 100 percent of any prescription costs after the annual total reaches $2,840 and until it hits $4,550. Those who spend more or less have at least three-quarters of the costs covered. Under the 2010 health law, Medicare will pay 7 percent of the cost of generic drugs and 50 percent on name-brand pharmaceuticals; by 2020, the doughnut hole will be closed.
If Congress were to pass Ryan’s plan and repeal the law, as House Republicans want, the 3 million to 4 million seniors left in the doughnut hole each year would immediately face significant out-of-pocket costs. They and all other Medicare beneficiaries would also lose access to a host of preventive-care benefits in the health care law, including free wellness visits to physicians, mammograms, colonoscopies, and programs to help smokers quit.
Perhaps more jolting, the Republican budget would cut spending on Medicaid—health care for the poor—much of which goes to long-term care for the elderly. Some 9 million seniors qualify for both Medicare and Medicaid benefits, and about two-thirds of all nursing-home residents are covered by Medicaid. The GOP budget proposes cutting some $744 billion from Medicaid over 10 years by turning the system into block grants that limit federal contributions and give states more choice in structuring benefits. No one knows exactly which Medicaid services states would choose to cut back, but senior citizens account for a disproportionate share of Medicaid outlays and would almost certainly bear some of the burden.
“We know that two-thirds of the dollars in Medicaid go to people who are disabled or over 65, so this is the big funder of long-term care in this country,” said David Certner, AARP’s legislative-policy director. “We also know this could have an impact on home- and community-based care, which is the kind of care individuals prefer the most [and] often the ones that will be cut first.”
The plan to grandfather traditional Medicare for those older than 55 could also have negative consequences for current seniors: In 2022, when the limited-subsidy program would be introduced, seniors who qualified for traditional Medicare would be allowed to switch to the new program. If healthier or younger beneficiaries make the change to lower their out-of-pocket costs, those still participating in Medicare would be part of an insurance pool that is less healthy and more expensive. To cover those higher per-person costs, Medicare might well be forced to either raise premiums or limit reimbursements to health care providers—which could prompt many to stop taking Medicare patients.
Republicans say that comparing their plan with the projected costs of unsustainable programs is an exercise in magical thinking. They have a point. But the idea of cutting benefits deeply without affecting anyone over 55 is almost as fantastic.
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This article appears in the June 4, 2011 edition of National Journal Magazine.