Medicare Advantage

“Determined to Save Medicare” – The GOP’s Entitlement Problem

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Medicare is considered an entitlement because most Americans get Medicare Part A, the part that covers hospitalization, for free when they turn 65 years old. Medicare Part B, the medical portion of the program, is usually a companion of Part A, but seniors pay a monthly premium for medical coverage. Medicare Part D, which covers prescriptions, also requires a monthly premium payment. Despite the fact that most Medicare enrollees pay for much of their coverage, the program is still considered an entitlement program. But it’s an entitlement program that Republicans and Democrats typically agree on because it’s done a good job over the last 50-plus years of offering affordable health insurance to seniors.

Some far-right conservatives, however, want to privatize the program in an effort to cut costs and make Medicare more viable for future generations. They are “determined to save Medicare,” as House Speaker Paul Ryan has said, but how they intend to do that isn’t clear.

Medicare’s Troubles

Medicare is financially unstable and headed for disaster without intervention. It’s estimated that the fund that pays for Part A benefits will be drained by 2028, and costs for Medicare Part D were projected to double by the end of 2016. The government is either going to have to open up new revenue streams for Medicare or pass the increases in costs on to seniors. Neither of these solutions is politically popular with Democrats or the public.

The major problem facing Medicare is the massive size of the upcoming beneficiary pool. Baby Boomers are retiring, and as they do, they’re signing up for coverage through a program that was designed with 1960s seniors in mind. People work later these days, well into their sixties and seventies, which affects how much Medicare can pay out over time. People also live longer while healthcare costs continue to rise. More medication, more hospital stays and longer coverage periods spell an impending financial crisis.

There are a variety of factors affecting long-term funding, but the bulk of the problem is a younger, larger enrollment population than the program has had to accept before. President Trump doesn’t want to mess with Medicare because it’s a popular program, but he is determined to make the program solvent and viable for future retirees.

The President’s Plan

Republicans in Congress may have different ideas on how to protect the Medicare program, but they all agree that from a financial perspective, something needs to be done. The problem is that Trump has not released any specific plans to save Medicare, while Republicans such as Paul Ryan have put out plans that fly in the face of what Trump is saying. Healthcare analysts have indicated that Trump has options for revitalizing the Medicare program, but Trump himself has not put forth any of his own ideas. Without a plan in place, many wonder whether Ryan’s plan will be adopted. Privatizing Medicare could have negative consequences on top of the potential disarray caused by changing America’s healthcare system again.

Paul Ryan Proposes Medicare Reform

Paul Ryan’s plan for Medicare would transition the program away from entitlement status to operating more like standard health insurance. Ryan wants to offer seniors a voucher each year that they could use toward the purchase of any health insurance plan they like. Medicare would be put on a marketplace just like the Obamacare exchanges, and seniors could use their voucher for Medicare or any other insurance plan they want.

This plan would strip seniors of automatic eligibility for Medicare and force enrollees to shop for health insurance among the myriad of options. It’s expected that the vouchers would go up in value each year based on the rate of inflation and not the rate of the rising costs of health insurance, which would force seniors to bear the burden of increasing healthcare costs. Vouchers might sound good on paper, but seniors are already overwhelmed with the options under the Medicare umbrella. Members of both major political parties have objected to Ryan’s Medicare reform plan, and Democrats are taking it as an opportunity to sow seeds of doubt in the new administration.

The Democratic Response

Democrats are going full speed ahead with the idea that the GOP’s plan for Medicare would be Ryan’s plan, also highlighting the fact that Ryan is proposing raising the eligibility age for Medicare from 65 years old up to 69 or 70. Ryan also intends to use the Republican majority in the House and Senate to repeal many of the measures in the Affordable Care Act that affect Medicare. Medicare Part A is viable until 2028 because of measures introduced under Obamacare. Before the ACA took effect, the program was estimated to become insolvent by 2017. Opponents of Ryan’s plan, namely Democrats, are on the political warpath, turning to ads that ran in 2011 when Ryan first introduced a Medicare reform plan.
Can the GOP save Medicare? It appears that conservatives want to make Medicare into the exact kind of marketplace program that they claim failed under the Affordable Care Act. It’s true that Medicare is in financial trouble and something needs to be done to stabilize the program. But the Democrats have not proposed a plan to rival Ryan’s recommendation, which leaves them with little bargaining power in Congress. Without a plan of their own, Democrats may have to concede that Medicare will be left to the new Republican administration.