Take your time reading, this is the big one.....it is the healthcare summary of Ryan's plan. The other parts are shorter I promise.
The Ryan Budget Plan Part 1: Health care, Medicaid and Medicare
One of America’s biggest and most pressing
concerns is the rising cost of healthcare (HC).
Both treatment and insurance prices are rising; causing employers to
drop health coverage, and people, when stuck with the bill, are going
bankrupt. State regulations are also contributing
to the rising costs of treatment further exacerbating the problem. Also, according to Congressman Paul Ryan over
half of doctors do not accept Medicaid, partially because Medicaid under pays
leaving doctors wanting for money.
Medicare is sinking into insolvency which will eventually leave our
seniors and eventually us footing the bill ourselves. Congressman Ryan attempts to address these
problems with his budget plan. Its
purpose is to try to make healthcare cheaper and attempts to be ride of the
government waste getting between you and your doctor. He wants to put Americans back in the driver
seat in deciding what healthcare is best for them.
I am sure we can all agree that
healthcare costs are the biggest driver of making HC unaffordable. For Congressman Ryan, over regulation,
subsidization and third party payments to doctors are the leading causes of
rising HC costs. What also affects
private HC also inadvertently affects HC provided by the government which in
turn shortchanges doctors or reduces coverage to keep costs in control. The result is people losing coverage they
need for high cost, often life saving procedures. With respect to Medicaid and Medicare, the
growing number of recipients is causing funds to be out spent. So Ryan wants to put Americans back in
control in an effort to reverse this trend.
Ryan starts with a refundable tax credit with $2,300 for individuals and
$5,700 for families. This credit is
adjusted for inflation through the consumer price index (CPI) and the percent
increase in the medical component of the CPI.
The credit is refundable which makes it available for low income persons
who pay no taxes and is advanceable which means you can use the credit to buy
HC at the beginning of the year rather than wait for your tax returns. The credit is also assignable which allows
the money to be forwarded directly to the insurer, whether that is your place
of employment or another healthcare option of your choice. Because the credit is applied to HC options
of your choosing, the net result is cheaper HC because as the insurers market
toward you the individual, as HC becomes more affordable due to the credit,
they need to adopt new options to provide the best HC for you and your family
rather than the cost savings plans that businesses usually get. This is what everyone has wanted, HC
customized toward the individual rather than one size fits all based on the
business affordability. As this credit
is given to every citizen, even if a person should lose their job or go to a
new business, your healthcare goes with you.
If the credit has left over money then it goes into an account for you
to use on other HC expenses. However, if
the credit does not cover the full coverage you are buying then you is
responsible for the difference. Despite
this, you having to pay beyond the credit limit are very unlikely, as under
this plan you as the consumer decide what part of healthcare to pay for. So you customize care according to your
needs. Employers will keep the business
deduction for group health insurance for their employees, so people that need
that extra bit of coverage can still get help from their employer. Also, tax preferences for healthcare savings
accounts with the 7.5% itemized deduction for medical expenses remains, but if
using the credit your premiums are not counted for the purpose of the
deduction. Those on Medicare and
Military health plans do not get the credit because they have a separate system
to cover their needs. Overall, the tax
credit idea gives the portability and flexibility that was needed in HC to make
it affordable for the individual American.
The plan does not stop at tax
credits. Small businesses will also
benefit under the Ryan plan, through the establishment of association health
plans (AHP). While traditionally HC is
too expensive for small businesses to afford, AHP’s will allow small businesses
to pool their resources nationally as a group to offer coverage to their
employees. This however is regulated by
the Federal Government which is something I do not agree with as they will say
what and how to cover employees’ health needs rather than let businesses
customize their plans to the work environment.
The plan also opens up the market to
allow even more consumer options in buying coverage. To do this people will be allowed to buy
across State lines and health insurers to sell across State lines. That means you are no longer stuck with the
State manufacture healthcare monopolies that we are currently subjected
to. This also means that the mandated
health benefits forced upon you by your State legislatures, which you may or
may not need, will be able to be ignored as you can buy healthcare from a
different State with different HC requirements’.
To do this
Ryan allows States to pool their resources through State based exchanges and high
risk pools (HRP) to help provide coverage to those normally denied HC due to
pre-existing conditions, or are high cost as defined by the State. Through the HRP, States my offer direct
assistance and or some form of cost sharing for low income and/or high cost
families. To insure proper
implementation States may contract with insurance companies, or another third
party to run and administrate the exchange. The goal here is for people to
choose the best plan for themselves with the States supporting them to make
their coverage more affordable. What will be required however is that all
participating insurers offer coverage without discriminating based on age or
health history and that the same statutory standards for HC to Congress are
applied to those using the exchange.
States will create transparency networks to help to improve transparency
in price, quality and treatment in HC while showing any reductions in
transition costs associated with enrollment.
Insurance companies will have independent risk adjustments through a
non-profit independent board which will have to ability to penalize insures for
picking and choosing the healthiest while rewarding those who take on the risk
of higher cost patients. The State
exchange will also have an open enrollment period and auto enrollment allowing
individuals to take part in the exchange through their place of employment, the
DMV or the like, but are not forced in any way to have healthcare at any time.
I do not agree entirely with the
State based exchanges due to the costs and implementation. States will be getting the highest cost
patients which alone are a major drain on money and so how the exchanges are to
be funded comes into question. Do not
get me wrong, those high cost patients are worth it, but if the HRP cannot be
funded properly than the participants will suffer. Also, while the non-discrimination on age and
health history sounds nice, it will invariably drive up cost. The older a patient is the more likely they
are to need more expensive treatment, health history offsets this by allowing
insurers to raise or lower premiums based on future health needs. If you take these two particular forms of
discrimination out, it drives up cost for everyone else and increases
healthcare costs. If you leave them in
however, you allow for more customization of coverage to account for future
health problems with only a small group paying out more in premiums who will
need aid rather than a larger group.
With respect to transparency, States giving out price and quality data
is a nice idea, but could that not be accomplished through Ryan’s proposed
Healthcare Services Commission (HSC), discussed later on, and the costs of the
exchange covered by already established transparency programs covering costs. Also, why leave it up to the States to
contract with each other for the free movement of healthcare. It would be much easier to have one set of
rules for healthcare for the entirety of the United States than a bunch of smaller
more complex exchanges. So I say leave
the HRP’s in as an option for States that are struggling to be a health insurer
of last resort. Finally, the non-profit
independent board with the ability to punish or reward companies for their
choice to cover these higher cost people should not exist. The States should be the insurer of last
resort for these unfortunate people, but some of these people with pre-existing
conditions will become cheaper to cover as healthcare cost decrease meaning
only the most severe cases should be left.
Thus, the non-profit board has no reason to exist. Overall, the exchange is a good idea, but
States should be able to establish and abandon them based on cost. For me only an insurer of last resort at the
State level should exist, with a re-insurer giving money to the patient or
health insurer directly when funds for a higher cost higher risk individual dry
up.
Ryan also creates the Healthcare
services commission (HSC) (out of Health research and quality agency) which will
act like the Securities and Exchange Commission (SEC) but for HC rather than
financial data. Its purpose will be to
create standards of measure for data, pricing, and effectiveness of healthcare,
of which there are currently none. The
HSC will publish and enforce quality and price information in the healthcare
industry. It will be led by 5 commissioners
chosen by the private sector and appointed by the President with no more than 3
members being of the same political party. A forum within the HSC will create the price,
quality and effectiveness standards like the financial accounting board does
for the financial industry. The forum
will have representation from the private sector and be authorized to create
metrics to report on price and quality data.
Its membership will represent views of patients, doctors, researchers,
and insurers all of whom will be serving independently of employment. The forum will keep up with innovation and
will publish, for public comment “a preliminary analysis on standards for
reporting price, quality, and effectiveness of healthcare services.” Once the comment period is over a final
report will be published with its regulations guiding the publication and
dissemination of healthcare information that will be enforced by the HSC.
Paul Ryan also attempts to have the
healthcare industry shift over to an all digital network to reap the benefits
of cost effectiveness, fast access to records and reducing chances of doctor
patient error. To accomplish this, he
wants people to own their own medical records and make them portable through
the internet. The mechanism for this
will be what Ryan terms as the National Health Information Network and health
record trusts (modeled on credit unions) which will manage your records for you
in the same way banks manage your financial data. In addition, Ryan’s plan accounts for medical
liability reform. Currently doctors fear
lawsuits, even though some are justified, and thus practice defensive medicine
which in turn raises the cost of healthcare.
Under Ryan’s plan a cap is placed on non-economic damages and assists
States in lawsuit (tort) reform. An
example of reform might be expert panels to resolve a medical dispute or a
specialized court on healthcare with judges specialized in dispute resolution. Whatever reform is chosen, the ones that allow
doctors to treat patients with less fear are the best.
Then there is the Medicaid
mess. Ryan offers the same tax credit to
Medicaid patients which hopefully will pull some out of Medicaid, but for those
who still can’t afford HC Ryan has a plan.
In the case of Medicaid, Ryan calls for more money to be given to the
individual on top of the credit to help these people afford the care they
need. You qualify for Medicaid in Ryan’s
plan by having a gross income of 200% or less of the poverty level and have one
dependant under the age of 19 while not having health insurance. Once qualified, the enrollees receive a
healthcare debit card exclusively for purchasing healthcare. If your income does not exceed 100% of
poverty level you get $5,000, 100%-120% of poverty level you get $4,000,
120%-140% you get $3,500, 140%-160% is $3,000, 160%-180% is $2,500 and
180%-200% is $2,000. There is an
additional $1,000 for each family where there is a pregnancy for the 12 month
period and an additional $500 for each child under the age of 1. At the end of each year up to a quarter of
the money left in the account can be rolled over for the next year. Combine these amounts with the tax credit; a
family under the poverty level can receive $10,700 a year to use toward
healthcare purchases and insurance of their own choosing. It empowers the poor to be able to control
their own healthcare.
The Medicaid program will have a 4
month enrollment period per year with those already predetermined as eligible
for Medicaid and the State Children’s Health Insurance Plan (SCHIP)
automatically enrolled in the debit card plan. The debit card plan is
implemented at the federal level, saving the States the excessive cost of
running the program, but 50% of the expense will come from the States. SCHIP does not change under this program, but
recipients may take part in both the HC debit card and the tax credit. The elderly, disabled and special populations
do not take part in the program, but instead stay on the original Medicaid plan
with States getting block grants to help fund the program, with the block grant
indexed for inflation via the CPI and medical component of the CPI while being
adjusted for population growth.
Personally, those with disabilities and special populations who can
function independently should be allowed to participate in the debit card
program, but get special aid to meet any additional health requirements which
will allow for the most serious cases to be handled by the government. Finally, Ryan provides education programs to
educate qualifying families on enrollment in the debit card option and insurance
plans. However, I do not agree with any
education program by the government because it is promoting welfare and why
would an education program be needed if the recipients can get all the
information they will need when they enroll. Taken together, Ryan’s Medicaid program gets
rid of lots of bureaucratic waste by letting recipients buy their HC directly
rather than getting it through the government which I am sure we all like, but
we don’t need the governments help beyond affordability and quality control.
Medicare is the final component of
HC changed by Ryan. It does not affect
those age 55 and older once implemented and is funded through the current
Medicare payroll tax of 2.9% of the Federal Insurance Contribution Act (FICA)
and Self-employed Contributions Act (SECA).
What does happen is that those under the age of 55will receive payments
in excess of $11,000 per year (the current average Medicare payout) to buy what
ever kind of HC our senior citizens so desire so long as they enroll in a
health plan of some kind. Just like
those getting the tax credit (Medicare recipients don’t get the credit) and
Medicaid enrollees, individuals will choose the health care options that best
suit their needs with leftover money placed in an account or invested in a
medical savings account (MSA) so as to be used to purchase or cover other HC
costs or if the money is not enough the senior citizen is then responsible for
the difference. Again that should not be
a problem as they now pick and choose HC based on need and not what the
government thinks they need.
The Medicare benefit is adjusted for
inflation through a blended rate of the CPI and the medical component of the
CPI. For those affected, Medicare
fee-for-service, Medicare part B, Medicare advantage and Medicare part D cease
to exist and are replaced with the new program which is funded by the Medicare
A and B trust funds. Payment amounts for
the new program are partially adjusted geographically which is phased out over
time. Amounts are also income related
and risk adjusted. Income relating is
modifying the payment based on income with those with an income below $80,000
($160,000 for couples) getting the full $11,000. Those having an income of
$80,000-$200,000 ($160,000-$400,000 for couples) get 50% of the payment and
those having an income greater than $200,000 ($400,000 for couples) getting 30%
of the payment. Risk adjustment is the
base $11,000 (or income related amount) with additional money if an individual
has been determined to be at greater risk based on their initial health exam by
an insurer whose results will be made available to Medicare so as to determine
your benefit. Thus, over paying and under paying for individuals virtually
disappears.
Low income beneficiaries are
eligible for additional support. Each
Medicare recipient may establish a free MSA, but low income earners get one
automatically with additional funds.
Specifically, those eligible for both Medicare and Medicaid and
beneficiaries below 100% of the poverty level get a subsidy equal to the “full
deductable amount of an average high deductable health plan” and those at
100%-150% of poverty getting 75% of the full deposit.
As part of the transition, those 55
and older will not be affected by the changes and not see any changes in
premiums, but the program will be strengthened such as through income relating
drug benefit premiums to create long term stability. Those aged 55 and younger will see the
eligibility age increase gradually to age 69 and 6 months. Also, a fail safe mechanism is installed
which will activate if the Medicare trustees determine the percentage of
funding from the federal government general revenues exceed 45% in the prior
fiscal year on one July or 2 months after the Medicare trustees report is
released, which ever is later, resulting in a 1% reduction in payments in
Medicare’s fee-for-service sector. This
is designed to keep costs down and in control and will only activate if
Congress fails to solve the problem. So
if the fail safe happens, you can lay blame directly on Congress. No pressure.
Overall, I like what Ryan does with
healthcare and combined with the other parts of his plan, healthcare will be
very affordable. What his plan does not
address is the regulations at the Federal level. At the State level, States will be lobbied by
insurance companies to allow for more flexibility in pricing and plan options
to adapt to the more patient centered environment so that area of regulation
will handle itself. I do question
certain things such as some Medicare recipients being also eligible for
Medicaid, but getting an additional benefit.
Also, rather than have an MSA, or a healthcare savings account,
harmonize them into one account with a debit card for the entire population so
as to simplify logistics. Ryan’s budget
does help a lot to address a good portion of the issues surrounding healthcare,
but it is not the begin all and end all.
Much more work must be done at all levels of government to reduce cost,
whether that be less regulation in one area or another, free trade with health
insurance and doctor services or letting doctors cut out insurance companies
completely by giving the doctor a monthly payment to cover all visits, so I can
say with confidence we are not done.
Aside from my critics I would not mind Ryan’s plan as is being
implemented and even Ryan himself said in the outline for his plan that changes
can still be made.
:Ryan Plan up date: Ryan has proposed another form of Medicare on top of the existing parts A,B,C and D. It is known as an Administrative Service Organization (ASO) which under under current law has the employer fund the workers health benefits (they foot the bill) with an ASO setting up a co-payment system, network of doctors and the like. The Medicare version substitutes the employer for the government and the ASO would be rewarded for saving medicare money (as long as quality of care is not reduced) and or increasing the quality of care. Essentially you can think of it as an account that ignores typical State regulations on healthcare to avoid inflated prices. So seniors would get a choice under Ryan's plan, of traditional medicare, the ASO version and medicare advantage. This change replaces the voucher system that was so unpopular.
Told you this one would be big. Hope you enjoyed part one, the other two parts are slightly shorter and will include any updates based on what is addressed in the essay. See you tomorrow ;)
