Not really a surprise, but Kaiser just did a serious technical study and concedes that, yes, a voucher program will cost more even with Ryan's revised plan that now allows seniors to stay with Medicare if they want. Most seniors will pay more under the voucher plan as Biden argued on Thursday:
"Converting Medicare into a voucher program modeled on the plan Mitt Romney and Paul Ryan have proposed would increase premiums for the majority of seniors, even ones who choose to remain in traditional Medicare, according to a comprehensive nonpartisan study (PDF) released Monday."
"The Kaiser Family Foundation delved into the likely impact of transforming Medicare into a “premium support” system. Under that approach, the federal government would provide seniors a subsidy to shop for insurance plans from a menu of competing private plans and traditional Medicare. That subsidy would be capped at the value of the second least costly premium in the marketplace."
"Using 2010 data as a model, Kaiser’s study found that among seniors who chose to remain in traditional Medicare, more than half would have paid higher premiums. Just under half would have paid the same. That would’ve yielded an average premium hike of $720 annually for seniors who chose to remain in traditional Medicare."
"Among seniors with private Medicare Advantage plans, 88 percent would have paid higher premiums unless they switched to a cheaper plan with less generous benefits. On average, seniors already in private plans would have paid $1,044 more annually, according to the study.
Taken together, 59 percent of Medicare beneficiaries would have ended up paying higher premiums than they do in the current system if they remained in their current plan."
http://tpmdc.talkingpointsmemo.com/2012/10/kaiser-study-medicare-premium-support.php?ref=fpb
The Romney campaign today tried to quibble at the margins as the study offers some caveats-like using 2010 assumptions.
"The caveats: the report makes clear that it’s not a perfect analysis of the Romney-Ryan plan. That’s in part because the Romney-Ryan would take effect in 2023, whereas Kaiser’s report studies the impact of such a plan taking effect in 2010. It’s also because Romney and Ryan haven’t provided enough details to conduct a truly thoroughgoing analysis."
"The Romney campaign quickly moved to dismiss the significance of the study".
“As the authors stress, this is not a study of the Romney-Ryan plan,” Romney spokeswoman Andrea Saul told TPM. “Our plan would always provide future beneficiaries guaranteed coverage options with no increase in out-of-pocket costs from today’s Medicare.”
The fact that they can't fully score it as the Romney team hasn't provided enough detail is hardly a point in the plan's favor.
"The study nevertheless concludes that, taking a broadly similar approach, the majority of seniors would have paid higher premiums in 2010 than they did under Medicare in its existing form.
Kaiser used Medicare Advantage bids for the year 2010 as proxies for private plan bids under a premium support system."
"The study found that if one in four seniors responded to the programmatic changes by switching into cheaper plans the share that face higher premiums would fall from 59 percent to 35 percent.
Costs would vary considerably across regions, as would the share of seniors subjected to higher premiums — populous states would be most affected, with seniors in Florida taking the greatest hit, the Kaiser study found."
"Two final key caveats: First, the Kaiser study does not project the longer-term implications for traditional Medicare. Many analysts warn that over time, sicker and older patients would choose traditional Medicare over private plans as private insurers tailored their plans to younger, healthier beneficiaries. Without strict rules and adequate risk adjustment, this would put traditional Medicare premiums on a “death spiral” and the public plan would collapse."
"Second, the Kaiser study looks at a single year, and does not model the impact of a Medicare spending cap. That’s not necessarily the case under the Ryan plan, which limits premium growth at GDP plus 0.5 percent a year. In other words, if the second-cheapest bid in any region exceeds that in a given year, the voucher would be limited to GDP + 0.5, likely leaving seniors to pay the difference on their own."
What is clear is that everything about the Romney-Ryan privatization scheme is misleading from top to bottom. The claim that those over 55 need not worry as traditional Medicare will be preserved is not the truth. One way or the other, under the premium support plan the cost of traditional Medicare will go up. Even the optimistic assumption that the number of seniors whose costs go up can be trimmed from 59 percent to 35 percent is hardly reassuring as it requires 25 percent of seniors to scale back their health insurance.
We can argue about just how many end up with higher payments-or lower quality healthcare. What we don't see in this analysis are many seniors who are actually better off-at most the Romney team can argue that fewer will be worse off if you make "optimistic" assumptions like more opt for cheaper plans-ie, less coverage, or lower quality coverage.
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