A Question About the Ryan Plan
Steven L. Taylor
Wednesday, April 27, 2011
I know that today is Birth Certificate Day and all, but I have a policy question: how does the Ryan Plan provide for universality in its version of Medicare? Yes, everyone of a certain age receives a voucher that can be used to purchase insurance, but what will guarantee that everyone will, in fact, acquire said insurance under the plan?
What happens to seniors who do not use their vouchers?
Will there be some version of an individual mandate to require purchase of insurance?
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective.
He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog).
Follow Steven on Twitter
LOL, universality. What makes you think Ryan sees that as even a plus, much less a goal?
The problem with achieving universality under the Ryan plan is not that some seniors might fritter away their vouchers. It’s that some (or most, for all he cares) still won’t be able to afford it even with the vouchers. They almost all have prior conditions after all.
In order to get an 86-year-old with recurring cancer any sort of insurance, you have force companies to take him, aka enforce community rating. And then to keep the healthy 65-year-olds from spending their vouchers on a retirement vacation you have to make sure they buy insurance with it, aka enforce an individual mandate.
So either Obamacare is perfect for seniors yet awful for middle-aged adults, congressional Republicans simply don’t care whether any seniors actually get insurance or die in the streets, or there’s some hypocrisy on the right. My money’s on the last two.
“What happens to seniors who do not use their vouchers?”
They die, I guess. But if the voucher’s unused, the money’s not spent. Neat solution.
Another question (and one that will loom larger, I think) is, would insurance companies be compelled to insure the elderly? Would an insurance company be compelled, say, to insure a 65-year-old with Type 2 Diabetes? Or kidney disease? Or a heart problem? Or any preexisting condition? (Being elderly, btw, is a preexisting condition.) And at price that said 65-year-old can afford (even with the voucher)? I’ll be not.
Universality isn’t very Randian, now is it…
Well yeah…what good is a voucher when no private insurance company will take it? One of the reasons we have Medicare is that no one wanted to insure the elderly. So why would they now when health care is so much more expensive? It’s an unworkable plan.
A voucher is free money. A rent.
There will always be companies who take them and offer “insurance” in return.
The question is whether the “insurance” is anything you’d want.
(Q: can I start a company offering medical tourism to India on vouchers?)
Should there be? I’m all for insurance regulations that require insurers to accept retirees (similar to what already entices insurers to provide Medicare Part B plans), but I can’t see why we must force retirees to get insurance. In general they will choose to do so, but it seems possible that there is a logical reason for some retiree somewhere to turn down that insurance and I can’t understand any justification for second-guessing the retiree.
Then what are you going to do with the sick elderly person who, for whatever reason, did not acquire insurance?
How about the early stages of Alzheimer’s?
And if there are no pre-existing condition strictures on getting insurance, why shouldn’t seniors wait until they are sick to buy insurance?
Do you actually know any senior citizens, especially those in their 70s, who don’t need any insurance? Because I don’t.
I can’t think of an obvious right answer. Perhaps the person refused health insurance under the voucher plan because they have a religious objection, either with modern health care or with the voucher system. In that case, I have to go with Freedom of Religion over the wonders of universality. Then again, perhaps they refused the health insurance because they already have benefits elsewhere that are acceptable to them but don’t pass muster under the Medicare plan. Perhaps they have enough money to self insure. In those cases, I can’t imagine telling them that they *must* use the Medicare plan even if they are already happy (“government: if you think our problems are bad, wait until you see our solutions!”). I have to trust that people aren’t complete idiots and make decisions based on what’s important to them.
Interestingly, there is already a system in place to have a person evaluated for whether they are competent to make legally binding decisions. The system is very invasive, and families hate going through it, but I can’t figure out a better way to say “this person is unable to care for themselves” that to actually say “this person is unable to care for themselves.”
That presupposes that lawmakers are unable to write useful regulations for a voucher program. If that’s the case, then I definitely don’t want them monkeying with anything!
Under current law, Medicare Part B has open enrollment periods. This alone makes it hard to get insurance “on demand.” I would have to be careful to avoid getting serious illnesses eleven months out of the year. I have no idea what other regulations are already in place for Medicare Part B, but I have a hunch that they exist and that similar regulations could handle the problem.
I know some senior citizens who have enough money to self insure. My grandparents had health coverage through their pension and did not need to purchase additional coverage. I can’t imagine how to write a regulation requiring people to get health insurance but allowing them to not use it (hospice care).
A creative, if unpersuasive response, as it really doesn’t address the underlying issue. Granted: the Christian Scientists will refuse health care. Now that we have addressed what amounts, numerically speaking, to a rounding error, that leaves other problems that need addressing.
This is a non-answer to the preexisting condition problem.
Indeed, but that is a rather small, indeed, minuscule portion of the population.
But you have to recognize that these valid exceptions exist, and that there is no “one size fits all” solution to the problem. But, then, how many seniors will choose to forgo the vouchers? I expect a “minuscule portion of the population,” so it’s apparently OK to call that a non-problem.
If no insurance can be provided at the necessary price point, then that is a problem. However that wasn’t the question asked. The question asked was “what if a responsible member of society makes a choice that violates the eternal goodness of universality?” And my answer is the same: I’m going to have to assume that the person making the choice knows what he’s doing, and I don’t see any way to fix the problem without causing more damage. Kind of like the position some people take on legalizing drugs. Except that I can actually imagine myself making the decision to forgo a voucher program, say to avoid agreeing to strings attached to the money.
Insurance is one of the most highly regulated businesses in the country. I would like to think that lawmakers and regulators are doing something more effective than voodoo or cargo cultism ( http://en.wikipedia.org/wiki/Cargo_Cult#Other_uses_of_the_term ). If lawmakers and regulators at this point are incapable of writing up regulations to avoid the preexisting condition problem, then we really need to declare defeat and stop tinkering with things. I have no idea what the relevant regulation would look like, which is why I don’t have that job. If somebody with that job is unable to come up with a reasonable regulation, then we are indeed in serious trouble, and we need to stop tinkering with things in the hope that it’ll get better some day.
This argument reminds me of the knee jerk reaction to efforts to have private companies manage public parks (“they’ll put a McDonalds in front of Old Faithful!” http://parkprivatization.com/wont-private-companies-just-build-a-mcdonalds-in-front-of-old-faithful/ ), but that reaction presupposes that the people writing the contracts have absolutely no idea what they are doing. Likewise, assuming that lawmakers and regulators can’t handle the preexisting condition problem presupposes that they are fighting a losing battle and that we ought to give up now before we lose any more money.
Generally, I prefer to know I’m fighting a losing battle sooner rather than later. Medicare as it existed two years ago is a losing battle. There are already doctors that refuse to treat Medicare patients because reimbursement rates are too low. The only solutions offered in the last two years — the doc fix and the IPAB — cut those rates further.
The Ryan plan, on the other hand, makes two changes that I think are fundamental to finding a solution to “how to care for millions of seniors.” First, instead of limiting the discussion to lawmakers and regulators, the Ryan plan also includes hundreds of companies with the promise that if they find a solution they can turn a profit. This approach requires the lawmakers and regulators to put enough constraints on the companies that companies only make a profit for solving the problem and not simply for gaming the system ( http://daviddfriedman.blogspot.com/2008/09/regulation-too-much-or-too-little.html , third paragraph), but I have more faith in their ability to do that than I have in their ability to solve the problem once and for all.
Second, the Ryan plan reminds people that health care actually costs money. It turns out that areas of health care where the pricing policy isn’t opaque (say, laser eye surgery and plastic surgery) have experienced lower costs; while areas with opaque pricing have experienced increased costs (“One liberal sage noted in a 2007 paper that ‘four decades of empirical research” have shown that insulating people through third-party insurance coverage “from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures.’ Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today’s invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes. Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection.” http://www.coyoteblog.com/coyote_blog/2009/12/health-care-cost-control.html ). Additionally, following the advice of Mr Furman, the Ryan plan puts the inevitable cost-benefit trade-offs in the hands of the consumers (“Cost control will never stick unless it is extricated from politics and transferred to individuals to make their own trade-offs.” compare to the “take it or leave it” health care plans you’re offered at work, somebody in the human resources department has sincerely tried their best to determine what policy you’d like; how close did they come?). On a related note, the Ryan plan gives up on the prospect of a “one size (or a handful of sizes) fits millions of seniors” approach to Medicare.