- The idea's been around for years. More recently, bipartisan
support's been growing. Various plans have circulated.
- A 2006 Congressional Budget Office (CBO) study assessed
"Designing a Premium Support System (PSS) for Medicare." It discussed
pros, cons, other choices and implications in terms of costs and recipient
- In 1995, Henry Aaron and Robert Reischauer first proposed
PSS based on managed competition principles. Numerous variations followed
with differing public support amounts.
- All plans have six common features:
- (1) Beneficiaries would choose from multiple approved
health plans. Risk adjusted payments and marketing practices would be regulated,
or so it's claimed.
- (2) Plans would offer a premium bid to cover core benefits.
- (3) Federal payments would reflect these bids, subject
- (4) Washington would provide beneficiaries a fixed premium
subsidy tied to annual health plan bids.
- (5) They'd vary depending on plans selected. Beneficiaries
would pay differential costs.
- (6) Traditional Medicare would compete on similar terms
with private plans, including on price.
- A March 1999, Bipartisan Commission on the Future of
Medicare approved a premium support plan proposed by then-Commission chairman
Senator John Breaux.
- Though it failed to get a supermajority needed for official
recommendation to Congress, it gained widespread support and became a prominent
option in subsequent Medicare reform debates.
- Proponents claim it relies on marketplace medicine to
secure sustainability long-term. They falsely say Medicare, Medicaid and
Social Security cause rising deficits and America's national debt burden.
- They also bogusly claim Medicare and Social Security
are going broke. When properly administered, in fact, both programs are
sustainable long-term with modest adjustments and by curtailing escalating
healthcare costs responsibly.
- If capital gains were taxed like income, huge amounts
would be raised for traditional Medicare, prescription drugs under Part
D, Medicaid, and other social programs. Instead, they're on the chopping
block for big cuts before privatization en route to eliminating them altogether.
- In contrast, under a universal single-payer system, Medicare
would be sustainable long-term. Eliminating private insurer middlemen alone
achieves dramatic cost savings.
- In its September 2007 report to Congress, the Congressional
Research Service (CRS) compared 2004 US healthcare spending with other
OECD (Organization for Economic Cooperation and Development) countries.
- It found America spent $6,102 per person (today it's
over $8,000), well over double the $2,560 average for other OECD countries.
Much of the difference comes from insurer administrative costs providing
no care. Other OECD countries deliver better overall services at less than
half what Americans spend.
- Premium support and similar plans are steps toward destroying
Medicare altogether, first by privatizing it for profit. Breaux's plan
set federal premium subsidies at 88% of the nationally weighted average.
- Beneficiaries choosing plans costing less than 85% of
the average would pay no premium. Those selecting higher benefit plans
would cover extra charges.
- Plans (allegedly) would have to provide benefits equal
to current Medicare coverage, though they could offer additional benefits.
They'd also be updated annually based on individual choice.
- Savings are alleged to come from beneficiaries selecting
lower cost options, price competition to attract enrollees, and letting
recipients purchase Medigap coverage for added benefits.
- Reality differs markedly from claims. Only universal
coverage achieves major savings. Alternatives don't. Independent studies
- Physicians for a National Health Program (PNHP) says
America spends double the developed world's healthcare average, yet performs
poorly on key indicators like life expectancy, infant mortality, and overall
- Currently, middlemen insurers, drug giants and large
hospital chains game the system hugely for profits. Medicare for all can
change that effectively and achieve major cost savings.
- Overall, US healthcare could make a quantum improvement
leap compared to today's dysfunctional system. Instead, bipartisan complicity
has worse in mind by cutting benefits, placing greater burdens on seniors
and others, letting corporate predators game the system, and still leave
millions uninsured, on their own and out of luck.
- Other Destructive Medicare Plans
- On December 16, the Brookings Institution published "Premium
Support: A Primer," claiming:
- "The major cause of the federal budget crisis, which
is still in its early stages, is the relentless growth of Medicare spending."
- Reasons given are baby boomer retirements and "persistent
increase" in per person costs. "Unless something is one, Medicare....will
grow from 3.6 percent of the nation's GDP in 2010 to 10.4 percent by 2080."
- "Unchecked, growth in spending on Medicare and interest
on the federal debt will bankrupt the country."
- Five Brookings participants were involved, including
Henry Aaron, Alice Rivlin and former Republican Senator Pete Domenici.
- He and Rivlin also co-chair a Bipartisan Policy Center
(BPC). In 2010, its budget slashing program was called "Restoring
America's Future." Implementation would destroy it for millions greatly
harmed or entirely left out by their proposals.
- They include:
- indexing Social Security benefits to life expectancy
to reduce them as longevity increases;
- eliminating annual cost-of-living adjustments (COLAs);
bogusly they claim inflation is overstated; in fact, it way exceeds official
numbers, especially medical expenses placing enormous burdens on recipients,
including retirees dependent on help;
- instituting a one-year payroll tax holiday for workers
and employers to save $650 billion; doing so, in fact, is hugely destructive
by draining revenues needed for entitlements;
- sharply cutting Medicare and Medicaid benefits by raising
premiums, co-pays, and outpatient fees; also establishing privately owned
health insurance exchanges to compete with traditional Medicare;
- by 2018, cutting Medicaid by the amount it exceeds GDP
growth so needy recipients get less en route to perhaps nothing;
- shielding insurers and drug giants from malpractice suits
by making it harder to file them; then capping non-economic and punitive
damage awards by adjudicating claims in "specialized malpractice courts;"
they'll, of course, favor providers over consumers;
- simplifying the tax code to two brackets (15 and 27%),
favoring the rich; regressively cutting the top personal and corporate
tax rate from 35% to 27%;
- eliminating home mortgage and most other deductions and
- taxing employer provided health insurance;
- instituting a 6.5% national sales tax, hitting ordinary
people hardest; and
- other regressive schemes, placing added burdens on households
least able to cope.
- Yet BPC outrageously claims their plan "provides
a comprehensive, viable path to restore our economy and build a strong
America for future generations and for those around the world who look
to the United States for leadership and hope."
- Dominici is a former US senator. Rivlin once headed the
Office of Management and Budget and the Congressional Budget Office. Yet
neither understands economics and finance enough to propose workable, constructive
- Their proposal like others, including Brookings, enriches
corporate predators and America's super-rich at the expense of all others.
In other words, it's another giant wealth transfer scheme, heading the
nation for third world status.
- So is a new bipartisan congressional one Senator Ron
Wyden (D. OR) and Representative Paul Ryan (R. WI) proposed to replace
traditional Medicare with "premium support" plans.
- At issue is eventual privatization to free Washington
from future obligations. As explained above, beneficiaries would get fixed
amounts to purchase private coverage through a federally regulated Medicare
- Initially, traditional Medicare would remain optional.
Longer-term it will transition to an entirely privately run system. Doing
so will put vital care out of reach for millions of seniors when they most
- The plan closely follows Ryan's April proposal to transition
Medicare toward fixed-sum vouchers. He, other Republicans, and growing
numbers of Democrats want government responsibility entirely ended. His
new plan temporarily lets it compete with private plans with beneficiaries
incurring greater costs.
- A Final Comment
- With November 2012 elections approaching, Obama and congressional
Democrats may tread lightly around this sensitive issue. Post-election,
however, traditional Medicare, Medicaid, Social Security and public pensions
are on the chopping block for elimination.
- Privatizations will precede it. Beneficiaries will be
more than ever on their own. Eventually they'll be entirely to free trillions
more dollars for warmaking and corporate handouts. Obama's fully on board.
So are most congressional Democrats.
- Safety net protections will disappear. Americans will
be on their own entirely, sink or swim.
- With one-third of US households impoverished or nearly
so, imagine how irresponsible governance will gravely harm millions more.
- Stephen Lendman lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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