A Basic Principle

A basic principle of politics is that the rules don’t matter if they inhibit your progress or agenda, but the rules are sacrosanct if they inhibit your opponents’ agenda or progress.

The Republicans have installed a Debt Clock at their convention in Tampa as a way to visually highlight their disdain for fiscal irresponsibility. The Republicans, with a Democrat in the White House and Harry Reid leading the Senate, are now deficit hawks. Even Condoleezza Rice, in her speech last night to the delegates, stressed the importance of getting our financial house in order. But it has only been a few years since Paul Ryan was voting for Medicare Part D and bailouts and Vice-President Dick Cheney famously declared that “Deficits don’t matter”.

Hypocrisy and the total absence of intellectual honesty are just as common on the other side. Up is down and down is up when it is politically expedient. The current Medicare debate is a perfect example.

Let’s take a two second detour to the “Bush Tax Cuts”. Congress, especially Republicans, like to pretend that revenues will increase if the tax rates decrease. But knowing that that is all BS, the cuts of 2001 and 2003 were made temporary and designed to end within ten years. This allowed Congress to ignore the fact that the legislation was not revenue neutral. They didn’t have to acknowledge the debt they were creating. Congress has been fighting about retaining those cuts for the last few years.

The Patient Protection and Affordable Care Act (PPACA) was billed as revenue neutral, too. It never was. Part of the funding for the PPACA came from the CLASS program, the ill-fated long term care policy that has already been eliminated. Part of the funding was to come from the new 1099 rules, which have also been repealed. There are still numerous fees and taxes sprinkled like fairy dust throughout the law. And 716 million dollars comes from future Medicare spending.

Ah Ha! The Republicans are right. He is gutting Medicare.

No, not really. As David Wessel notes in today’s Wall Street Journal, both Obama and Ryan remove a similar amount of future funding from Medicare. Mr. Romney has now backed himself into a corner and pledged to restore the money. That too will change.

The problem is that none of these men are at all credible when discussing this issue. The numbers never add up. The details never include the HOW something will work.

Where are we now?

1. Medicare was designed to pay about 75% of a senior’s health care expense

2. Our current system incentivizes care

3. Our current system creates an environment where fraud and abuse are almost inevitable

4. We have no way to cap expenses currently

5. About 30% of Medicare dollars are spent on a person’s last year of life

How do you control costs? The obvious answer is to reverse as much of the above as possible. How do you lose an election? The obvious answer is to attempt to reverse any of the above.

The President has proposed the creation of the Independent Payment Advisory Board (IPAB). By setting standards in both care and pricing, the government would begin to get a handle on unnecessary procedures and costs. The IPAB will classify certain questionable treatments as elective or self-pay. If you want it and can pay for it – go ahead.

Mr. Ryan would have you buy a private insurance policy. He would give you just enough to purchase a basic policy, the second worst in the marketplace. If you want more coverage, a plan that might pay for certain physicians or medications, you will make up the difference. The insurer will classify certain questionable treatments as elective or self-pay. If you want it and can pay for it – go ahead.

The results are about the same. The wealthy will always have access to care. The rest of us should be OK. If all of this looks vaguely familiar, think about the number of prescription medications that are now available over the counter. OTC doesn’t require a prescription, so the government (Medicare, Medicaid, and government employee coverage) and the insurers save money. No doctors’ visits. No coverage for the cost of the drug. If you want Prilosec, pay for it.

Albert Brooks, in his dystopian novel 2030, offered a vision of the U.S. where the Right To Life movement shifts its focus from abortion to preserving, at any cost, the lives of the elderly. Is it that far fetched to envision warehouses of comatose elderly connected to expensive hardware, alive in name only? Would a Republican Party ready to extend the protections of the 14th Amendment to the unborn require unlimited care for the brain dead? And if that care is mandated by the government, will it also be unfunded?

The answer – Perhaps. See all of those rules about small government vs. large government; regulations vs. the free market are only as strong as the special interests pushing our politicians. The good news is that our politicians occasionally surprise us.   DAVE   www.bcandb.com

Lie To Me

So, which is better? Would you prefer a politician who tells you whatever he thinks you want to hear, whose only core commitment is to his own election? Or would you rather have someone who is clear-voiced and unashamedly direct in his pursuit of an agenda that even his followers consider unyielding?


My friend Bill (name changed) has a problem. Four years of President Obama are more than enough for Bill. Health Care. Foreign Policy. The Economy. There have been few bright spots for Bill, a moderate Republican. And moderation is the issue. He could vote for Mitt Romney, he told me and anyone else that would listen, because once in office Romney was the candidate most likely to rein in the whack jobs in the House.

In other words, he was hoping that the guy running for President was a pendulum. He has been left of Kennedy and right of Gingrich. Once elected, he should just flop into the middle.

This past Saturday morning, Mitt Romney chose Paul Ryan to be his running mate. On Saturday afternoon, Bill threw up his hands in disgust.

Since this is Health Insurance Issues With Dave, we should take a look at what will be the key issue of the campaign and the subject of millions of dollars of TV ads – Medicare.

Does Paul Ryan want to end Medicare as we know it?

Yes and No. The 2011 budget Mr. Ryan prepared and packaged as The Path to Prosperity: A Blueprint for American Renewal originally replaced the current Medicare program for all seniors in the year 2022. The Democrats beat that proposal like it was a piñata at a ten year old’s birthday party. The 2012 version, crafted in part with Ron Wyden (D-Ore), retains traditional Medicare as an option, thus killing it more slowly over time.

This blog has covered Medicare numerous times. It is important to note that Medicare was never designed to cover 100% of a senior citizen’s hospital or doctors’ bills. The first anniversary post of this blog included a complete breakdown of what Medicare does and doesn’t cover.

We should also note that the only time Either Side is telling the truth is when they are deriding the other guy’s plans for Medicare. The President does cut (mostly in future growth) over 700 billion from Medicare. But Mr. Ryan’s plan does not restore the cuts. Mr. Romney initially endorsed the Ryan budget while offering a vague statement of ideals designed to give the impression that he has a different plan.

The current Medicare spending for a typical 66 year old is currently around $5,700 per year. Both the President's plan and Mr. Ryan's assume a significant rise in cost to the government over the next 18 years.

The cuts aren’t the only detail the two plans share. Insurance Exchanges, the expensive new marketplace to purchase insurance, may be a sore spot for Republican governors, but Mr. Ryan is a big fan. The Patient Protection and Affordable Care Act (PPACA) utilizes exchanges for all ages. Mr. Ryan wants to set up exchanges, too, but only for senior citizens.

So what are the differences between the President’s plan and Mr. Ryan’s? According to The Path to Prosperity website, the most important element is that the PPACA creates the Independent Payment Advisory Board (IPAB) to orchestrate Medicare cuts. Mr. Ryan’s site raises the possibility of faceless bureaucrats rationing access and randomly denying needed health care. It is very scary.

The Ryan solution? Premium Supports / Vouchers. Starting in 2023, new Medicare beneficiaries will be guaranteed a ticket to the next to the cheapest (not the cheapest, the next one up!) insurance option in the marketplace. There will be more comprehensive plans available to those willing and able to pay the difference. Mr. Ryan envisions doctors, hospitals and insurers fighting for your partial payment.

You won’t be denied the opportunity to have access to any cure, any doctor, any hospital – which you can pay for.

But the 2012 plan keeps Traditional Medicare as an option.

“If you like your current insurance, you will keep it”, President Obama said during the health care debate. Those of us in the business knew that that was impossible. The grandfather rules were confusing and contradictory. The insurers could only maintain policies operating under separate regulations for so long. Medicare Part D, the underfunded Republican Rx program introduced in 2003, eliminated Medicare Supplement Plan F which was saving my clients a lot of money. It is hard to pretend that traditional Medicare, Medicare as we know it, would survive the Ryan plan.

Under the Ryan program, people who turn 65 prior to 2023 (such as Dave Cunix, class of 2020) will be allowed to stay on the current system. New beneficiaries will be offered the new system or an updated version of what we now have. How will funding for these different options be maintained? What will actually be the mandated minimum coverages? How much more will it cost for the government to regulate two systems? With no new healthy retirees coming into traditional (pre-2023) Medicare, how long will it be before we have a death spiral?

The possibility of capping our current Medicare system with no access to new, healthier members is why this debate is not limited to Americans under the age of 54. We, anyone who has the hope of seeing 2030, would be impacted by the Ryan plan.

Where does that leave us? We have out-of-control costs, no idea what we should and shouldn’t cover, and little willingness to pay what it would really take to get the job done. It doesn’t solve any problems, but sometimes, I guess, it does feel better when they just lie to me.

DAVE

www.bcandb.com