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Thursday, July 14, 2011

The Truth About Grandma's Future



Medicare is an entitlement program signed into law in 1965 by President Lyndon Johnson as an amendment to the original Social Security Act. President Kennedy said “such a program was chiefly needed to protect, not the poor, but people who had worked for years and suddenly found all their savings gone because of a costly health problem.”  It was sold to the public as a policy that everyone pays into throughout their working life in order to receive medical insurance once they retire (age 65) and health issues are likely to become more prudent. On the surface it sounds like a just cause, especially since we will ALL be in that situation one day. It is actually one of the few government programs whose existence is agreed upon by both parties. However, there is also another aspect of it that is agreed upon. Once you peel back the cover you discover that it is yet another inefficient bloated government program that has outgrown its financial stability and is heading towards bankruptcy. Medicare started as a single program, but like most government programs, the original was just a foot in the door. Currently there now exists Medicare Parts A,B,C, and D. Currently Medicare costs are rising at a rate of 7.2% every year, which is twice the rate of our economy’s growth.  If a trailing car is traveling at twice the speed of the car in front of it, then it will eventually pass that car up. The same holds true regarding the rate of costs. Continuing on the same path will result in Medicare costing more than our economy can pay for. As reported by The Wallstreet Journal, and many other news outlets, the hospital services covered by Medicare Part A will be DEPLETED in 2017. That is two years sooner than what was predicted last year. In fact, last year was the first year that Medicare paid out more in benefits than the payroll taxes of The United States citizens brought in. This will only get worse. Once the baby-boomer generation retires, the system will become flooded with roughly 70 million new consumers. As reported by the Heritage Foundation, in 2035 Medicare is predicted to see a 90% increase in cost. There is no way around this crisis, and in order to SAVE this program a major reform is needed.

There have been several actions taken recently that have affected Medicare. The first being President Obama's reduction in payroll taxes as a direct result from the recession. This was good for the economy because it kept money in everyone’s pocket, but it took funding away from Medicare. Since Medicare is an entitlement program it’s considered to be on autopilot when it comes to funding it in the budget. Meaning this program is one of the first programs that is funded and Congress cannot touch it unless new legislation is enacted. So once the payroll tax cuts took funding away, the government was forced to find revenues else where, meaning they borrow it, which plays back into the debt ceiling debate.

Secondly, under law the Medicare Trustees must issue a Medicare funding report every year to make sure Medicare can pay for at least 45% of total costs. This low threshold was passed this year, and by law the President must act to fix it. So far nothing. Why? Well, because usually the answer would be to borrow more money, but now with the debt ceiling crisis he does not have that option. Also, this law has a trigger that is built in to help improve funding. It doesn’t raise taxes, but it does decrease the cost of Medicare. How? It decreases the percentage of the fee that doctors are reimbursed for their services. According to the American Medical Association (AMA) the Medicare Trustees have enacted a 30% (some claim a 21%) decrease in what doctors will get reimbursed for the services they give to their Medicare patients in 2012. See the way Medicare works is the government sets a percentage of the total cost it will reimburse to the doctors, and the doctors will absorb the rest. Since the government has no economic sense or market value cues it does not see or understand the cause and effect, but the doctors and patients will feel every bit of it. One result of this is that doctors raise their prices above their true overhead cost for ALL patients to make up for it. This doesn’t directly hurt the patient since they are not paying for it directly. No harm, no foul. However, the cost of Medicare and healthcare for everyone increases. The other option for the doctor is that they stop seeing Medicare patients all together. This is not good for grandma, but eventually a doctor can only take so much financial loss to keep their practice in business.

Thirdly, with the passage of Obama-care, funding was stripped again. In order to pay for this new massive entitlement program, they assume that $500 billion in “waste” will be taken from Medicare to pay for it. Since this funding source was sold as "waste", realistically it should not affect the quality of Medicare benefits. Who gets to decide what is waste though?  In enters the death-panels. Ok, maybe "death panels" are an exaggeration, but it gets the people’s attention, and it really isn’t off by that much. Obama-care gives an enormous amount of power to the Health and Human Service Secretary, Kathleen Sebelius. You don’t remember electing her? Oh wait, that would be because she is appointed. She not only gets to decide which insurance companies are deemed fit under Obama-care and which policies are appropriate, but she and her cost-cutting panel, the Independent Patient Advisory Board (IPAB), will decide which services and medications should be cut (rationed) to keep cost low. This panel is not voted on by you and it is not even approved by Congress, meaning they cannot be held accountable. Now that is one huge,size 15 government foot in the door of your examination room. The IPAB is put in place as a trojan horse that Obama will point to one day, once Obama-care is failing, to act as a bipartisan and independent board that will recommend moving away from private insurance options and to a single payer system.

So as of now we have a huge Medicare system that is quickly approaching bankruptcy, a government that controls the prices that doctors receive, a freely appointed advisory board that will “recommend” “cost-cutting” measures, a President that has no plan but to create a new healthcare entitlement that will include the remaining people who weren't already relying on a government program, and you have NO CHOICE but to shut up and take what the doctor orders once you're over 65. And they call you crazy to make a connection to Socialism? Come on, now let’s see what a Conservative is all about.

My man is Rep. Paul Ryan. I have been a fan of his for awhile now, and with his new PLAN to fix our debt crisis, I commend him even more. Unlike President Obama, or any other Liberal Democrat, Ryan has put together a bold idea to change Medicare (and all other entitlements) as we know it. Be prepared though, as with any other Conservative mind, the Left needs to scare you in order for you to ignore him, write him off, and be embarrassed to support him. There is one problem, Ryan is too smart for anyone to actually sit down with him and contest him on his plan. He knows his economics, he’s the new chairman of the House budget committee, and he has a Path to Prosperity for America. His plan covers all budget problems, but let’s focus simply on Medicare. You are being told that Ryan wants to kill Medicare and “throw grandma off a cliff”, but once you get past the commercials and attack adds you will see that he wants to SAVE Medicare for our seniors and divert everyone else to a better option.

His plan, The Path to Prosperity, calls for any savings found in Medicare to go to keeping the promises to the current Medicare benefits for seniors, and those who will be seniors in the next 10 years (55 or older). For anyone right now that is 55 or older, they will not see any change to their current Medicare plan. It also does away with the IPAB cost-cutting board.

 It also reforms the payout on lawsuits against doctors and hospitals. This is called tort-reform. Most people don’t realize how much doctors pay every year just for a policy to protect them against frivolous lawsuits. This will not prevent patients from suing or getting a fair compensation, but will index it to the patient’s needs and not the lawyer who is trying to get rich off of them. This is a huge factor in healthcare cost at all levels, and it is the reason why doctors send you to get every test under the sun even if you had it done by another doctor already. They need to cover their ass from being sued for another doctor’s misread test. It will also reformulate the way doctors are compensated for seeing Medicare patients, and will provide incentives if they increase quality and efficiency.

For those now under 55 or starting in 2022, Medicare recipients will be given the option of CHOOSING their own medical policy from a list just like members of Congress. No longer will there be a one size fits all approach to medical coverage. Providers will not be allowed to pick and choose who they accept depending on their needs. If they want to compete for new enrollees, then they need to put together a plan that attracts them, meaning quality benefits and low prices. That is how the free market works. No longer will doctors receive a fee-for-service from the government. The policy premiums will be paid with help from the government by using a premium-support model. Basically, each enrollee would receive a premium contribution equal to the average premium of Medicare recipients. This contribution would increase as consumer prices increase, and as the recipient’s age increases.  The contribution will also increase if a recipient has a more specific greater medical need, or is more economically burdened.  The bottom 92% of earners receiving Medicare will receive 100% of the compensation, with low-income recipients receiving an extra $7,800. The top 2% will receive 30% of the compensation, and the top 6% will receive 50%.  This is similar to the system setup for Medicare Advantage (Part C) and Medicare Prescription Drug Plan (Part D). And just to be fair, those 55 and older may opt out of the old Medicare program and join the new one. Choice, what a great idea.

Rep. Paul Ryan explains his plan for Medicare:


Don't bother looking for a plan from the Democrats, it doesn't exist. Their only plan is to resort to the Liberal media, Liberal talking points, and Liberal attack strategies to convince you that the man you just listened to above wants to kill old people. Do not be fooled, and do not allow Liberals to convince you that Medicare as we know it is just fine, and then kick the can down the road. Lying to our seniors about the solvency of their future medical benefits to avoid political damage is the crime of our century. 



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