If the Republicans have their way and privatize Medicare, it will put millions of seniors at the mercy of health insurance companies and force them to pay $39 trillion more for Medicare coverage than they would under existing law, according to the Center for Economic and Policy Research (CEPR). That's why this is a massive windfall for insurers. The GOP budget plan will also shift trillions of dollars in costs onto America's seniors and families. When the program begins, new Medicare enrollees would have to pay at least $6,400 more each year out-of-pocket for private coverage equivalent to current Medicare benefits. And the average Medicare beneficiary's contribution to the cost of Medicare benefits would skyrocket from 25 percent under the existing system to an astonishing 68 percent in 2030, according to CEPR and the Congressional Budget Office.
The Republican plan will enrich insurance companies at the expense of consumers and actually increase the overall net cost of health care by $34 trillion over the next 75 years, the planning period Medicare trustees are required to use. The increased costs are because of the private health insurance industry's excessive profits, obscene CEO salaries and the costs of the bureaucracy it creates to deny care to consumers. These private plan administrative costs often eat up 20 or even 30 cents of every insurance premium dollar compared to Medicare's roughly 3 cents. And in the past few weeks it's become clear that the industry's profits keep going up as consumers are being crushed by ever-rising co-payments and deductibles.
The sheer waste of Medicare privatization is truly staggering. According to an eye-opening report by CEPR's David Rosnick and Dean Baker, the Republican plan will ultimately force seniors to pay $39 trillion more for health care through 2084 than if Medicare were left alone. That's equal to a tax of about $110,000 for every man, woman and child in the country.
What we ought to do is increase our efforts to eliminate waste, fraud and abuse instead of impoverishing seniors, wasting massive amounts of taxpayer funds and giving the insurance companies control of seniors' health care. That's what the Affordable Care Act does, along with other Medicare reforms within President Obama's deficit reduction proposal.
The Republican plan, drawn by Budget Chairman Paul Ryan of Wisconsin, picks winners and losers in a big way. The winners are big corporations, like the insurance companies and their Washington lobbyists who spend millions to maintain a stranglehold on health care and the Republicans in Congress. The losers are America's working and middle-class families.
The Republicans also give massive tax breaks to millionaires and billionaires like the Koch brothers. To pay for this, they make savage cuts to Medicaid that will destroy the economic security of 60 million people - seniors, people with disabilities, poor families and children. They eliminate Medicare as we know it, and make deep cuts to dozens of programs of services that support America's families, from Head Start to Pell grants that help kids go to college.
Eliminating Medicare, giving seniors vouchers designed to lag far behind actual health care costs, and handing seniors' health care to the insurance companies is just plain wrong. Significantly increasing overall health care costs, as the Republican plan will do, is also wrong.
The Medicare privatization plan is part of the GOP's larger attack on our country's shrinking middle class and the promise of the American Dream: that if you work hard you can expect to have a good job with good wages and benefits, to provide a better life for your children, and to retire with dignity.
Cross posted on the NOW!Blog here.