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GOP Plan to Privatize Medicare Is Back, Although in Pretty New Clothes, Thanks to Health Care Companies

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If you think Rep. Paul Ryan's plan to privatize Medicare is dead, think again.

Last week, the insurance industry and its allies began what I predict will be a massive campaign to sell the public and policymakers on the idea of moving forward with the Ryan plan -- albeit with a few tweaks and new a new sales pitch to make it seem more consumer-friendly.

An outfit called the Healthcare Leadership Council (HLC) announced in a press release a scheme that could be called Ryan-lite, but don't be fooled: the plan would -- to use a favorite industry term -- take us down the "slippery slope" toward a complete corporate takeover of the Medicare program. (Insurers and their allies for years have warned Americans that enacting sweeping health care reforms they don't like would lead us down the slippery slope toward socialism.)

After Ryan unveiled his Medicare privatization plan earlier this year, there was such widespread criticism that it briefly became a political liability for the Republicans.

The GOP-controlled House of Representatives approved the plan, which would replace the existing Medicare program with vouchers that beneficiaries could use to buy coverage from private insurance. But Ryan's blueprint never made it out of the Senate. It's not hard to figure out why: the vouchers would have required most future Medicare recipients -- many of whom like today's recipients will be on fixed incomes -- to pay far more out of their own pockets for coverage than in the existing government-run program.

I wrote at the time that the Ryan plan had the strong support of private health insurers, who would like nothing more than to have the federal government hand the Medicare program over to them. The congressman's proposal would represent a vast new revenue stream guaranteeing profits forever.

While Ryan would move all Medicare beneficiaries into a privatized system in one fell swoop, the HLC's plan would do it more gradually. It would, in the words of the press release, "create a new 'Medicare Exchange' in which private plans would compete on the basis of cost, quality and value."

Sounds great, doesn't it? The HLC -- which comprises the CEOs of the country's biggest insurers, drug companies, hospital chains and medical device manufacturers and some powerful industry trade associations -- knows from years of research that if you can work in the words "compete," "quality," and "value" into the same sentence, you can persuade people to believe that what you're peddling is what they obviously should pull out their checkbooks to buy.

But buyer beware. Rest assured that the HLC is far more interested in the special interests of its member companies and organizations than in what is in your best interests. And the very existence of the HLC shows why it has been so difficult to get Congress to enact comprehensive health care reform. The executives who fund the HLC want first and foremost to preserve their profits and protect their incomes.

I know all this from personal experience from my days as an insurance industry executive, going back to the early days of the Clinton administration.

The HLC actually came into existence during the last part of the administration of the first Bush in the White House. The CEOs who formed the leadership council were hoping a Republican president would help them eliminate some of the government regulations they didn't like.

The HLC really came into its own, however, after Bill and Hillary Clinton unveiled their health care reform proposal in 1993. Just about every health care special interest didn't like one thing or another about the Clinton plan, so they came together under the umbrella of the HLC to kill the whole initiative. I attended many HLC meetings in Washington during that time and came to see quickly just how influential this heavily bankrolled organization would be in doing exactly what the CEOs wanted.

As I wrote in my book, Deadly Spin, the HLC was behind a fear-mongering campaign against the Clinton plan that the individual companies it represented could not pull off on their own without appearing self-serving. The CEOs needed a front group to do it, and the HLC fit the bill.

The HLC office became a war room for the special interests. Over the subsequent months, the organization conducted a multi-pronged attack, including grassroots organizing, lobbying by corporate executives and PR events. It faxed statements almost daily to Washington-based reporters and also to lawmakers, and it ran ads raising the specter of health care rationing and warning of bureaucratic interference with patient rights if the Clinton plan were enacted.

It worked. Many Americans -- came to believe the HLC's claims, and so did enough members of Congress to kill the Clinton plan.

We can all now expect the HLC to embark on the same kind of campaign to privatize Medicare and to get a few other things its members have long hoped for from Congress. One of the priorities is enacting tort reform at the federal level (a favorite of doctors' groups as well as insurers). The HLC also wants Congress to raise the age of eligibility for Medicare benefits from 65 to 67.

To make its Medicare privatization proposal more palatable, the HLC would allow folks to continue enrolling in the traditional Medicare program. At least for a while. And the HLC calls for a more generous "inflation factor" for premium subsidies (vouchers) than the Ryan plan.

But make no mistake. What the CEOs really want is exactly what Ryan proposed. They are just putting different clothes and a few more accessories on it to make it prettier.