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Kaiser Health News - "Can GOP Deliver On Its Promise To Preserve Traditional Medicare?"
Here is an excellent article that explains how even Ryan's second Medicare plan that offers to promises to preserve traditional "Medicare" as an option actually hastens its demise.
http://www.kaiserhealthnews.org/Stories/2012/March/09/GOP-Dilemma-What-To-Do-About-Medicare.aspx
The Romney and Ryan-Wyden plans would replace the current guaranteed benefits with a subsidy, paired with a minimum set of benefits. Federal spending would be capped, with beneficiaries expected to be on the hook for additional expenses – exactly how much is unclear since neither Romney, nor Ryan and Wyden have provided many details.
* * *
Under the Ryan-Wyden proposal, all plans, including traditional Medicare, would submit bids for how much they would charge to cover a beneficiary's health care costs. The government would pay the full premium for the private plan with the second lowest bid, or for traditional Medicare, whichever is lower. Beneficiaries would have to pay the difference if they chose a plan that set rates higher.
Uwe Reinhardt, a health care economist at Princeton University, predicts that traditional Medicare would likely cut payments to medical providers to avoid higher premiums, driving many of them out of the program. "More doctors and hospitals would have the ability to say they are not taking Medicare patients, as they do with Medicaid," he said. "If the bulk of the elderly are in the private plans, and only the rump are in fee-for-service, it's easy to make that a poverty program."
Traditional Medicare could also be at a disadvantage if it is left with the sickest enrollees -- a scenario that is already playing out, Gruber said. Today, three-quarters of Medicare beneficiaries are in that program, and a quarter are in private Medicare Advantage plans -- mostly HMOs and PPOs. Those plans have enrolled the healthiest seniors since the mid-1990s, using inducements such as subsidized gym memberships, according to an April report by the National Bureau of Economic Research.
* * *
Under the Ryan-Wyden proposal, all plans, including traditional Medicare, would submit bids for how much they would charge to cover a beneficiary's health care costs. The government would pay the full premium for the private plan with the second lowest bid, or for traditional Medicare, whichever is lower. Beneficiaries would have to pay the difference if they chose a plan that set rates higher.
Uwe Reinhardt, a health care economist at Princeton University, predicts that traditional Medicare would likely cut payments to medical providers to avoid higher premiums, driving many of them out of the program. "More doctors and hospitals would have the ability to say they are not taking Medicare patients, as they do with Medicaid," he said. "If the bulk of the elderly are in the private plans, and only the rump are in fee-for-service, it's easy to make that a poverty program."
Traditional Medicare could also be at a disadvantage if it is left with the sickest enrollees -- a scenario that is already playing out, Gruber said. Today, three-quarters of Medicare beneficiaries are in that program, and a quarter are in private Medicare Advantage plans -- mostly HMOs and PPOs. Those plans have enrolled the healthiest seniors since the mid-1990s, using inducements such as subsidized gym memberships, according to an April report by the National Bureau of Economic Research.