What Paul Ryan and Other Politicians Are Afraid To Tell You About Medicare and Medicaid

Last Updated Apr 6, 2011 6:27 PM EDT

There's been a big stir this week about the House Budget Committee's proposals to drastically trim Medicare and Medicaid. The Committee, headed by Rep. Paul Ryan (R-WI), offered a plan to gradually increase Medicare's eligibility age to 67 and move to a voucher system for future recipients -- people currently under age 55. It would also repeal various features of Health Reform, such as the plan to close Medicare's hated Part D "Donut Hole." Predictably, the proposal makes suggestions for rooting out waste and inefficiencies in delivering medical care.

Not many people contest the notion that the Medicare and Medicaid systems need to change to keep our country solvent; most agree that these programs aren't sustainable. And nobody argues with the importance of rooting out waste and inefficiencies, but just accomplishing these goals alone won't make these programs affordable.

Regarding skyrocketing medical costs, there's an elephant in the room that is ignored by most politicians, including the House Budget Committee: Our politicians don't want to tell Americans the ugly truth that they are unhealthy, largely due to their own behavior, and that they aren't smart shoppers when it comes to medical care. So there -- I said it. Now let me explain my reasoning.

In a prior career, I worked for an HR consulting firm that prepared "avoidable claims analyses" for its large corporate clients. An "avoidable medical claim" is one that could have been prevented if an employee had a healthy lifestyle that minimized the chances of needing medical care. Avoidable claims also included situations where an employee needed care but wasn't receiving the most efficient treatment. (An "unavoidable claim" was for a medical condition that couldn't have been prevented by a healthy lifestyle and, when care was needed, the most efficient care was delivered.)

Often these avoidable claims analyses showed that roughly 50 percent of an employer's medical claims were avoidable, either through improving the health of its employees, or by making the delivery of medical care more efficient. 50 percent! That represents the potential savings in our medical system we could enjoy by influencing people to eat well, exercise regularly, stop smoking, and learn how to better navigate the medical delivery system. That number also includes making delivery of medical services more efficient, which, I acknowledge, is beyond the control of individuals who need medical care.

Now I'm not so optimistic to think we can all achieve a 50-percent reduction in medical spending overnight, or even in the next decade. But if we could achieve even half of this 50-percent savings, the costs for Medicare and Medicaid could be cut by an enormous amount and would be sustainable for years to come. And don't tell me it can't be done -- other countries spend far less per capita on medical care than the U.S., while enjoying equal or higher levels of health among their citizens.

I'd like to see our leaders adopt programs that are compassionate about delivering medical care for unavoidable claims, while encouraging us to do everything within our power to reduce avoidable claims. Here are some possibilities that could help accomplish these goals:

  • If you smoke, you'd be charged higher premiums for Medicare and would have higher deductibles and copayments. However, Medicare would pay for 100 percent of the cost of any smoking cessation programs.
  • If your body-mass index, blood pressure, and/or cholesterol counts are in extremely unhealthy ranges, you would likewise be charged higher premiums and would have higher deductibles and copayments. At the same time, you'd be able to utilize free wellness programs.
  • The government could add excise taxes on foods that are clearly unhealthy, such as soda and foods with high fat and sodium contents. These taxes would be similar to the additional taxes currently levied on cigarettes.
  • The government could create educational programs that help Americans learn how to navigate the medical delivery system in order to help them make better treatment decisions.
Phase in the above changes to give Americans proper and compassionate notice -- give us three to five years to make these lifestyle changes and to learn about efficient health care delivery. Are the above suggestions drastic? Maybe, but they're less drastic than the House Budget Committee's proposals, and they have the potential to significantly improve our lives while saving lots of money.

The Republican's Budget Committee proposals don't address these lifestyle issues. Ironically, even if the Budget Committee's proposals were adopted, the costs for Medicare and Medicaid wouldn't change much during the next 10 years, due to the delay and phase-in of most of the proposal's features. Yet many corporations are seeing significant payoffs in three to five years with wellness programs they're adopting.

Let's make changes to Medicare and Medicaid that will pay off more quickly than 10 years from now. We need to add these features to efforts to root out waste and inefficiency because we'll need to use every idea possible to keep Medicare and Medicaid solvent.

Rep. Ryan says he wants to have an adult conversation about the budget. Well, how about an adult conversation with Americans about the implications of their lifestyle choices?

To our readers: Read the handwriting on the wall. In some way, shape, or form, the federal government is going to pay much less for your Medicare benefits in the future. This should be obvious from the House Budget Committee's proposals and last year's proposals from the bipartisan Deficit Commission.

I encourage you to do everything in your power now to avoid needing to use the medical system. I say this not to wag my finger at you, not as a desire to be your Big Brother, and not to join the food police. Rather, I hope for your sake that you can avoid spending boatloads of money on medical care in your retirement years. I'd rather see you enjoy your retirement!

Image from iStockphoto contributor blackwaterimages
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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.