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Medicare Reform: the Elephant in the Room

The Wall Street Journal reported in their SmartMoney section on House Budget Committee Chairman Paul Ryan's proposal to stem rising Medicare costs. According to the Centers for Medicare and Medicaid Services, Medicare spent an average of $11,743 on beneficiaries in 2009, an amount Ryan calls “unsustainable.” Ryan’s plan essentially aims to lower that average to $8,000 a year.

Under his plan, for anyone born after 1956, that $8,000 figure becomes the ‘new’ entitlement guarantee – although more may be guaranteed in the case of old age or special infirmity.  Here’s the major change however, rather than the doctors or healthcare providers applying directly to the Medicare system for payment, the bills will be sent to your health insurance company with the first $8000 in costs reimbursed directly to the insurance company by the government. In other words, Medicare would pay the first $8000 of your health care expenses but beyond that it would be up to you to find health insurance coverage or pay out of your own pocket.  This would not affect anyone until they were entering the Medicare system in 2022 upon turning 65 or disabled.  Prior to that year, enrollment in the Medicare benefit would remain the same.

Whether you love or hate this plan, it shines a spotlight directly on our health care system and its largest problem:  given a chonic need, how can anyone afford the cost of care over a long period? I see this problem every day in our elder law and special needs practice. For the most part, my clients realized that the health care costs in this country are unsustainable but unless we solve what is driving those unsustainable costs, it wouldn’t matter what the Medicare reimbursement is, it will never be sufficient for those with chronic or catastrophic illness.  What is worse, if the federal government, the largest health care insurer in the country, is unable to pay the cost of health care, how can we possibly believe that insurance companies will fare any better? Obviously, what Ryan is counting on is that the insurance companies will better control the waste, fraud and abuse that is so prevalent in the government program but is that the only factor driving health care costs ever higher?  Somehow, I don’t think so. I didn't believe that when President Obama first proposed it and I don't believe it now.

Since a reasoned solution must be found and soon, the very least the Ryan plan has sparked it some creative discussions.  Government subsidized private health insurance could mean that seniors and the disabled will have access to plans that can be tailored to fit them more precisely and healthier seniors  could see reduced costs; add to that a better awareness of what we are being asked to pay for services rendered and it could be the start of real health care reform.

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