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Republican Medicare Plan: The Politics of Reform

The 2016 election has laid the stakes for a new Republican Medicare plan, in an effort to make the popular insurance program for seniors fiscally solvent. As it stands, Medicare, which covers Americans over 65, is on a path to insolvency in the long term.

In order to reign in spending, and create long-term stability for this program, Republicans would like see Medicare turn to a “Premium Support” model. Essentially, House Republicans want to end the era of government paying for services on a per-use basis. They want to see a “fixed government contribution” for each person covered under the program.

The House of Ryan

Congressman Paul Ryan has been pushing Medicare reform for the last five years. Ryan is famous for his budgets that intend to address the federal government’s persistent deficits. This latest proposal is merely another chapter in Ryan’s long-standing efforts to reign in government spending.

While reforming Medicare is one part of that fiscally conservative platform, exactly how the program is restructured will determine how much the government stands to save.

Advocates will underline that Medicare is gobbling up an ever increasing slice of the federal budget, so reforming this entitlement is necessary to getting our nation’s finances under control. If done properly, taxpayers could see massive savings from introducing more private sector competition into a market that’s grown unbelievably expensive. 

We already have a pilot program

Right now, traditional Medicare patients, or the other two-thirds of seniors, get 80 percent of their bills covered. If they want full coverage they have to purchase supplemental insurance that covers the other 20 percent.

The other third of Medicare beneficiaries are already using Medicare Advantage, which looks similar to the Republicans’ reform plan. Under this system, the government has a price per head that it pays for each patient, regardless of services received. The insurer is incentivized to keep the patient healthy, because if they get sick, they’re on the hook for the large bills.  

The other side of the coin

Opponents claim that this type of system suspiciously looks a lot like Obamacare, which the GOP has promised to repeal in the coming year and, according to some studies, has extended the projected lifespan of Medicare itself. Also, there will have to be some sort of subsidy system that helps lower-income seniors shoulder the cost of healthcare, which inevitably wades into Medicaid reform (Medicaid helps lower-income people of all ages).

This “defined contribution” or “voucher system” will certainly attract ire from Democrats and retirees who face cuts in benefits. It’s likely that some seniors will see their premiums rise, as the government offloads some of the cost of care on to beneficiaries. Moreover, it puts the burden of identifying and choosing policy and medical service providers on the beneficiaries, who generally prefer baseline Medicare as opposed to Medicare advantage as they age and require more care.

Politically hazardous? You bet!

Even if advocates assume Medicare reform is the right thing to do to restore fiscal stability, it still is a very popular program, and messing with of the largest entitlement programs in America will have real political consequences.

The Congressional Budget Office points out that an overwhelming majority of Americans (70 percent) would rather have Medicare remain as it is today. Less than a quarter of folks, according to the same study, would like to see Medicare shift to a premium support model. Fiddling with such a popular program is bound to sink many politicians’ careers.

I’m not old, who cares?

It’s likely you have parents or older loved ones, who will see major changes to their insurance coverage. Older people consume medical services at a much higher rate than young people, and medical expenses are a major problem in American society.

As a reminder, we will all grow old and decrepit eventually, so we should care about Medicare.

It’s also important to remember that Medicare is a huge driver of federal spending, and that in it’s on the path to fiscal ruin in its current form. Look for a lively debate surrounding Medicare reform to bubble up in the near future, as our elected leaders finally confront problems that have been ignored for far too long.

This article originally appeared on

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