What should you do to guarantee yourself access to future medical care? If you're under 55, talk to your parents or your grandparents. They hold the votes that will decide whether your options will be as good as theirs.
The Republicans, in a recent House budget resolution, offered seniors and Boomers a breathtaking deal. The GOP will promise not to include Medicare in their massive cost-cutting program, for people who are currently 55 and up. In return, they have to agree to throw the next generation under the bus.
The GOP appears to be backing away from its plan, but that's only temporary. The goal is to end Medicare as we know it for people under 55 today. Starting in 2021, new beneficiaries would have to buy private, individual coverage. The insurance companies would offer different plans, at different prices, with different types of benefits. The government would provide vouchers to help cover the cost. But the vouchers wouldn't buy as much insurance as Medicare provides today. To get the same level of coverage, you'd have to pay more yourself, with your out-of-pocket amount increasing every year. The government saves money, while you pay more of your rising health expenses in older age.
Will seniors and Boomers take the deal? So far, they've shown themselves willing to vote their interests and forget the young. For example, more than half of the population 65 and up opposes the health reform law, known as the Affordable Care Act (ACA).
ACA provides coverage to people under 65 who are uninsured, usually because they can't afford the premiums or have pre-existing medical conditions. The law also preserves seniors' Medicare benefits, in full, but cuts $500 billion in future payments to various health-care providers. That's enough to make beneficiaries worry. In last year's election, older people gave GOP candidates a 20-point lead -- the largest margin of any age group. They oppose aid to the young for fear that it will come at their expense of their own program.
David Certner, the AARP's legislative policy director, believes that this "me first" attitude won't carry over to the Medicare debate. He remembered that when George W. Bush tried to privatize Social Security in 2005, he promised that it would affect only people under 55. "People on Social Security were adamantly opposed, even though they were exempt," Certner says. "They knew how valuable the program is." He thinks they'll treat the proposed Medicare change in the same way.
By contrast, the American Seniors Association backs the GOP approach.
Polls vary, depending on how the question is phrased. When Gallup asked people whether they favored the Democratic or Republican budget plans, 48 percent of seniors chose the GOP, compared with only 30 percent of those 18 to 29. The Kaiser Family Foundation got a different result by including details of the plans. The Kaiser question: "Should Medicare continue as it is today" or "be changed to a system in which people choose their insurance from a list of private health plans that may offer different benefits at different premium amounts, and the government pays a fixed amount ... toward that cost?" With that explanation, only 30 percent of older people voted for change.
The GOP plan, based on a proposal made by Wisconsin Rep. Paul Ryan, contains five dangers seniors haven't been told about.
1. It repeals some of the gains in Medicare that seniors made last year. For example, take the "doughnut hole" in Medicare's prescription drug plan, which causes seniors to pay more for expensive illnesses. The ACA eliminates that hole by 2020, saving seniors money. The Ryan plan opens it again. Ryan also repeals the ACA provisions that cover various types of preventive care.
2. The GOP plan cuts future payments to health-care providers, just as ACA does.
3. Like the ACA, it cuts money from the costly Medicare Advantage plans. "Medicare Advantage" is the existing, semi-privatized portion of the Medicare system. Congress created it in the early 1980s, under a different name, on the theory that private health insurers could run Medicare more cheaply than the government could.
That turned out to be wrong. Medicare Advantage plans are much more expensive, due to their higher overhead and need for profits. In 2008, they were costing taxpayers an average subsidy of 14 percent more, per person covered, than traditional Medicare. The private insurers use a small portion of these lavish subsidies to provide what appear to be "free" benefits, such as gym memberships and eyeglasses -- perks that people in traditional Medicare don't get.
The ACA gradually lowers the subsidies that Medicare pays to the Advantage plans. As a result, the plans are raising the premiums they charge seniors and cutting some of the perks. During the 2010 elections, this played as "cutting Medicare," which isn't true. Medicare benefits remain the same. The GOP budget plan cuts these unjustified subsidies, too.
4. Both parties have proposed various caps on total spending and federal deficits. If passed, current Medicare spending will be included in any across-the-board cuts.
5. Republicans probably can't carry off these radical changes to Medicare, even if they sweep the elections in 2012. The gorge would rise, in people under 55 today, if they had to keep paying Medicare taxes for an aging Boomer generation that cheerfully cut them out. They'd soon demand better benefits for themselves or a cut in the numbers of people on the Cadillac plans.
The votes in 2012 will be an interesting test for the Me Generation, growing old. Do they believe in shared sacrifice, to tame the raging deficit? Or will the Boomers ladle the cost onto younger people, exempt themselves, and hope that the kids will quietly keep paying the bills?
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