According to the bipartisan Ryan/Wyden Plan updated in December 2011, Americans who are age 55 or over will experience no changes to their current Medicare benefit structure. Participants would be free to opt into a private plan once the new Medicare Exchange is in place. Within a decade, Medicare would begin offering seniors a choice among private Medicare-approved plans competing alongside the current Medicare plan on the same Medicare Exchange.
The practical implementation problem involves the definition of a private Medicare-approved plan. Essentially, seniors in the private Medicare approved plan might be locked out of coverage with individual doctors unless the doctor is part of a network plan like an HMO. For this reason, future retirees might choose to remain in Medicare even under the Ryan/Wyden Plan.
To some extent, this problem already exists with the HMO health care delivery model. A retiree joins an HMO such as GHI. The HMO provides all of the necessary care, but retirees are tied to service within the approved network. In addition, patients are subject to the medical protocols of the HMO or network. They may not be able to get complementary medicine protocols such as acupuncture covered. In addition, there are multiple levels of allowances for drugs in an HMO. While generic drugs may be covered fully, more complex formulary drugs may have enforced plan limits and higher deductibles. In due time, all patents expire and generic versions of the drug are born.
The Ryan/Wyden plan would introduce a premium support system, giving seniors the choice of either traditional Medicare or a Medicare-approved private plan to be phased in over a decade. Low-income seniors on Medicaid would continue to have all out-of-pocket expenses paid for by Medicaid. Other low-income seniors not qualifying for Medicaid would receive fully funded savings accounts to help defray costs.
The practical implementation problem is that Medicaid recipients cannot afford to pay small or large out-of-pocket costs in any event. Therefore, the time period between the recipient incurring the cost and receiving reimbursement in the medical savings account is crucial. Wealthier seniors who need help the least would have their benefits reduced commensurate with their income. Currently, supplemental Medicare insurance is offered for expenses not covered by Medicare.
Medicare Exchange Health Care Plan suppliers would be required to offer
benefits comparable to those offered by traditional Medicare. Premium-support payments would be actuarially risk-adjusted to ensure that the seniors with the greatest needs for medical attention are guaranteed affordable coverage. Participating plans could not deny coverage based upon the current medical history of a patient. The existing Medicare and Medicaid Services bureaucracy infrastructure would oversee all plans, and Medicare Exchange plans would be organized and administered .as Medicare is now..
Allowing private Medicare-approved plans to compete directly with a traditional Medicare plan might strengthen the infrastructure of both medical care delivery systems. This goal might be achieved by creating new incentives for plans to develop better delivery models for managing patient care. Exceeding the cost containment caps would not trigger automatic cuts or higher premiums. Instead, Congress would be forced to make supplemental appropriations, as is done now.
Herein is an opportunity for Congress to levy an excess consumption tax on
junk food in order to raise revenues to cover current costs and provide reserves for future cost increments, inflation adjustments, population increases and other conditions that could forseeably raise costs. This same opportunity to implement an excess consumption tax exists for Obamacare as well.
Small businesses with 100 workers or less could offer their employees a free choice option . This free choice option gives employees the right to use the amount that their employer contributes toward health coverage to purchase health insurance now and in a transition to retirement.
This description admits essentially that employees of small businesses will be required to contribute to their health insurance costs alongside the employer. Again, implementation of an excess consumption tax on junk food could make premiums more affordable to both employers and employees.
At present, there is an open question as to how vouchers would be administered
under the Ryan/Wyden Plan. A voucher system could be subject to cost cuts in the future. Traditionally, Congress has made changes to protect the Medicare program on a continuing basis. Again, the idea of an excess consumption tax on junk food would provide badly needed funds to anticipate the growth in medical costs arising from the consumption of junk food.
In addition, the Ryan/Wyden Plan should address the open question as to where cost savings go. Are cost savings plowed back into the Medicare Plan or will they go to another part of the federal budget outside the Medicare System? There is another question as to the investment of surplus funds in the Medicare System. These surplus funds should be invested in high quality financial instruments with a low risk of loss. At bottom, derivative instrument investments should be severely limited in favor of risk averse investments.