Paul Ryan’s Own Little Obamacare

Republicans’ Medicare plan would be wide open to the same attacks the GOP is aiming at Obamacare.

National Journal
Sam Baker
Jan. 6, 2014, 4:59 p.m.

For Re­pub­lic­ans, Obama­care is the gift that keeps on giv­ing. Each day brings a fresh batch of hor­ror stor­ies of people los­ing their plans, get­ting cut off from their doc­tors, and shelling out more for premi­ums.

But had Mitt Rom­ney won in 2012 and let Paul Ry­an have his way with Medi­care, Re­pub­lic­ans would be on the oth­er side of the fence, try­ing to de­fend a health care over­haul that pro­duced a nearly identic­al suite of hor­ror stor­ies.

That’s be­cause, des­pite the polit­ic­al chasm between them — and though neither will ad­mit it — Obama and Ry­an are push­ing sim­il­ar policies in the bid to change the U.S. health sys­tem. Both rely on private in­sur­ance, sold through a com­pet­it­ive ex­change, with help from a gov­ern­ment sub­sidy.

And though they ap­ply it to dif­fer­ent pop­u­la­tions, both pro­grams share a fun­da­ment­al con­ceit: They move a big group of people in­to the private in­sur­ance mar­ket. Both Obama and Ry­an ar­gue their over­haul would im­prove the coun­try as a whole, but neither can es­cape the real­ity that in a shift of that size, some people will lose out.

And each plan’s losers would have sim­il­ar stor­ies to tell.

Some premi­ums will go up

In­sur­ance com­pan­ies cut back on cov­er­age or lim­it pro­vider net­works to keep premi­ums low. Lower premi­ums also will usu­ally come with high­er de­duct­ibles. This is pretty much how private in­sur­ance works, and that will be the case wheth­er Obama or Ry­an is ex­pand­ing the mar­ket for private in­sur­ance.

The Con­gres­sion­al Budget Of­fice has said seni­ors’ costs would be high­er un­der Ry­an’s mod­el, though it has de­clined to provide a spe­cif­ic es­tim­ate, in part be­cause the plan hasn’t been in­tro­duced as a bill.

A Ry­an-like plan that im­me­di­ately af­fected cur­rent seni­ors would raise seni­ors’ premi­ums by an av­er­age of 30 per­cent, and their total spend­ing — in­clud­ing premi­ums, de­duct­ibles, and oth­er cost-shar­ing — by about 11 per­cent, ac­cord­ing to CBO.

CBO’s es­tim­ate isn’t an ex­act com­par­is­on to the Ry­an plan, be­cause it as­sumes changes would af­fect cur­rent be­ne­fi­ciar­ies — which Ry­an’s plan wouldn’t. But lib­er­al health care ex­perts poin­ted to the re­port as an in­dic­a­tion of how the Medi­care pro­gram would be dif­fer­ent once a policy frame­work sim­il­ar to Ry­an’s was fully in place.

The House Budget Com­mit­tee, which Ry­an chairs, did not re­spond to a re­quest for com­ment for this story.

Some people can’t keep their doc­tors

Re­pub­lic­ans have as­sailed the Af­ford­able Care Act be­cause many of the plans offered through its ex­changes use nar­row net­works of doc­tors, hos­pit­als, and oth­er health care pro­viders. Con­ser­vat­ives sharply cri­ti­cized the White House after Zeke Emanuel, a former health care ad­viser, said that if you like your doc­tor, you can pay more to keep your doc­tor.

But, again, the same ba­sic trade-off ap­plies un­der the Ry­an Medi­care plan. The Ry­an plan guar­an­tees that seni­ors will have a sub­sidy big enough to buy a health care plan. But in most parts of the coun­try, it won’t be enough to buy tra­di­tion­al Medi­care.

So, in or­der to choose that pro­gram — and its ex­tens­ive pro­vider net­work — seni­ors would have to make up the dif­fer­ence out of their own pock­et. They could pay more for the plan that ex­ists today, or they could switch to a cheap­er private plan that would likely of­fer a smal­ler pro­vider net­work, mean­ing they might have to change doc­tors.

Premi­ums for tra­di­tion­al Medi­care would cost seni­ors about 56 per­cent more than they pay today, un­der the ac­cel­er­ated scen­ario CBO ana­lyzed. About half of Medi­care be­ne­fi­ciar­ies would buy private plans and half would re­main in tra­di­tion­al Medi­care, un­der CBO’s mod­el.

Losers, but dif­fer­ent losers

Obama­care and the Ry­an plan are sim­il­ar, but it’s im­port­ant to re­mem­ber their re­spect­ive start­ing points. Obama­care is primar­ily cov­er­ing people who have nev­er had in­sur­ance be­fore, and also re­quir­ing some people (no one knows ex­actly how many, but it’s some­where in the mil­lions) to buy new policies. Ry­an, mean­while, would over­haul an ex­ist­ing pro­gram.

“With Medi­care, you’re talk­ing about the whole 40-plus mil­lion be­ne­fi­ciar­ies who are go­ing to have to make new choices and whose be­ne­fits and premi­ums are likely to be af­fected,” said Paul Van de Wa­ter, a seni­or fel­low at the Cen­ter on Budget and Policy Pri­or­it­ies, which op­poses Ry­an’s mod­el for Medi­care.

From a cost per­spect­ive, that means the Ry­an plan has one es­pe­cially big win­ner: the fed­er­al budget. The pur­pose of Ry­an’s plan is to cut fed­er­al en­ti­tle­ment spend­ing, and it would do that. Over­all costs, com­bin­ing fed­er­al spend­ing and seni­ors’ costs, would also fall.

Obama­care launched a new stream of fed­er­al health care spend­ing while the Ry­an plan would shrink an ex­ist­ing one. That’s a big dif­fer­ence. But both op­tions would ex­pand the mar­ket for private in­sur­ance, and there­fore would ex­pose mil­lions more people to nar­row net­works and the oth­er stand­ard trade-offs of the in­sur­ance mar­ket. Both would in­ev­it­ably mean some de­gree of stick­er shock for cer­tain people, and pay­ing a lower price would mean giv­ing up be­ne­fits.

“How it all works out is com­plic­ated, but that’s an­oth­er point of com­par­is­on with health re­form,” Van de Wa­ter said.

{{ BIZOBJ (video: 4628) }}

Some premiums will go up

In­sur­ance com­pan­ies cut back on cov­er­age or lim­it pro­vider net­works to keep premi­ums low. Lower premi­ums also will usu­ally come with high­er de­duct­ibles. This is pretty much how private in­sur­ance works, and that will be the case wheth­er Obama or Ry­an is ex­pand­ing the mar­ket for private in­sur­ance.

The Con­gres­sion­al Budget Of­fice has said seni­ors’ costs would be high­er un­der Ry­an’s mod­el, though it has de­clined to provide a spe­cif­ic es­tim­ate, in part be­cause the plan hasn’t been in­tro­duced as a bill.

A Ry­an-like plan that im­me­di­ately af­fected cur­rent seni­ors would raise seni­ors’ premi­ums by an av­er­age of 30 per­cent, and their total spend­ing — in­clud­ing premi­ums, de­duct­ibles, and oth­er cost-shar­ing — by about 11 per­cent, ac­cord­ing to CBO.

CBO’s es­tim­ate isn’t an ex­act com­par­is­on to the Ry­an plan, be­cause it as­sumes changes would af­fect cur­rent be­ne­fi­ciar­ies — which Ry­an’s plan wouldn’t. But lib­er­al health care ex­perts poin­ted to the re­port as an in­dic­a­tion of how the Medi­care pro­gram would be dif­fer­ent once a policy frame­work sim­il­ar to Ry­an’s was fully in place.

The House Budget Com­mit­tee, which Ry­an chairs, did not re­spond to a re­quest for com­ment for this story.

Some people can't keep their doctors

Re­pub­lic­ans have as­sailed the Af­ford­able Care Act be­cause many of the plans offered through its ex­changes use nar­row net­works of doc­tors, hos­pit­als, and oth­er health care pro­viders. Con­ser­vat­ives sharply cri­ti­cized the White House after Zeke Emanuel, a former health care ad­viser, said that if you like your doc­tor, you can pay more to keep your doc­tor.

But, again, the same ba­sic trade-off ap­plies un­der the Ry­an Medi­care plan. The Ry­an plan guar­an­tees that seni­ors will have a sub­sidy big enough to buy a health care plan. But in most parts of the coun­try, it won’t be enough to buy tra­di­tion­al Medi­care.

So, in or­der to choose that pro­gram — and its ex­tens­ive pro­vider net­work — seni­ors would have to make up the dif­fer­ence out of their own pock­et. They could pay more for the plan that ex­ists today, or they could switch to a cheap­er private plan that would likely of­fer a smal­ler pro­vider net­work, mean­ing they might have to change doc­tors.

Premi­ums for tra­di­tion­al Medi­care would cost seni­ors about 56 per­cent more than they pay today, un­der the ac­cel­er­ated scen­ario CBO ana­lyzed. About half of Medi­care be­ne­fi­ciar­ies would buy private plans and half would re­main in tra­di­tion­al Medi­care, un­der CBO’s mod­el.

Losers, but different losers

Obama­care and the Ry­an plan are sim­il­ar, but it’s im­port­ant to re­mem­ber their re­spect­ive start­ing points. Obama­care is primar­ily cov­er­ing people who have nev­er had in­sur­ance be­fore, and also re­quir­ing some people (no one knows ex­actly how many, but it’s some­where in the mil­lions) to buy new policies. Ry­an, mean­while, would over­haul an ex­ist­ing pro­gram.

“With Medi­care, you’re talk­ing about the whole 40-plus mil­lion be­ne­fi­ciar­ies who are go­ing to have to make new choices and whose be­ne­fits and premi­ums are likely to be af­fected,” said Paul Van de Wa­ter, a seni­or fel­low at the Cen­ter on Budget and Policy Pri­or­it­ies, which op­poses Ry­an’s mod­el for Medi­care.

From a cost per­spect­ive, that means the Ry­an plan has one es­pe­cially big win­ner: the fed­er­al budget. The pur­pose of Ry­an’s plan is to cut fed­er­al en­ti­tle­ment spend­ing, and it would do that. Over­all costs, com­bin­ing fed­er­al spend­ing and seni­ors’ costs, would also fall.

Obama­care launched a new stream of fed­er­al health care spend­ing while the Ry­an plan would shrink an ex­ist­ing one. That’s a big dif­fer­ence. But both op­tions would ex­pand the mar­ket for private in­sur­ance, and there­fore would ex­pose mil­lions more people to nar­row net­works and the oth­er stand­ard trade-offs of the in­sur­ance mar­ket. Both would in­ev­it­ably mean some de­gree of stick­er shock for cer­tain people, and pay­ing a lower price would mean giv­ing up be­ne­fits.

“How it all works out is com­plic­ated, but that’s an­oth­er point of com­par­is­on with health re­form,” Van de Wa­ter said.

{{ BIZOBJ (video: 4628) }}

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