Sunday, May 20, 2018
Opinion

Ryan's Medicare plan would leave many seniors stranded

The federal budget proposed by Rep. Paul Ryan, the Republican vice presidential nominee, extols the benefits of "promoting true choice" for Medicare beneficiaries. In truth, though, the Ryan plan would substantially reduce choice for many people on Medicare — by cutting them off from their current doctors.

Doctors see Medicare patients, despite the relatively low payments they receive for doing so, partly because Medicare represents such a large share of the health care market. If a substantial number of beneficiaries moved out of Medicare and into private plans, as Ryan proposes, doctors would have much less incentive to see Medicare patients. And the elderly who want to remain in traditional Medicare would risk being stranded.

The evidence suggests that, in time, this problem could well affect a large share of Medicare beneficiaries. To put that evidence in context, though, it helps to first review the history of the Ryan plan.

The proposal has changed since it was presented in 2011. In the original version, traditional Medicare was eventually to be replaced in its entirety by private plans. The Congressional Budget Office found that this shift would raise health care costs drastically because the private plans wouldn't be large enough to enjoy Medicare's leverage in negotiating prices with hospitals and other large providers. The savings that private plans could achieve because beneficiaries would share more of the costs, and therefore economize more, would be more than offset by that loss of leverage — and by the private plans' higher overhead and need to turn a profit.

In response, Ryan revised his proposal. Under Ryan 2.0, private plans would co-exist with traditional Medicare. (The CBO hasn't fully evaluated the revised plan yet.) Many supporters argue that the new plan can't be as big a problem as the old one, since beneficiaries could always choose to remain in traditional Medicare. In health care, however, choice isn't always innocuous — and can sometimes be harmful. The reduced choice of doctors for those who remain in traditional Medicare is one of those adverse consequences of moving beneficiaries out of the program.

Currently, Medicare beneficiaries almost universally enjoy excellent access to doctors. And the great majority of beneficiaries never have to wait long for a routine appointment, the Medicare Payment Advisory Commission has found. Roughly 90 percent of doctors accept new Medicare patients.

Doctors provide this access even though they are reimbursed by Medicare at rates that are only about 80 percent of commercial rates — partly because Medicare is such a large share of the market. Which brings us to the concern about the Ryan plan.

How important is Medicare's market share in influencing physician participation? The evidence is limited, but the best study to date suggests it is significant. In the 1990s, Peter Damiano, Elizabeth Momany, Jean Willard and Gerald Jogerst, all associated with the University of Iowa, surveyed Iowa physicians and examined variation among counties. They found that for each percentage-point increase in the share of Medicare beneficiaries in a county's population, doctors were 16 percent more likely to accept patients on Medicare.

About 10 percent of the U.S. population is now enrolled in traditional Medicare, and an additional 5 percent has private Medicare plans. Let's assume, for the sake of argument, that the Ryan plan would cause another 5 percent of the population to shift, and to be conservative let's cut in half the Damiano estimate of the impact from that reduction in Medicare's market share. Then the chance that a doctor is willing to see traditional Medicare patients would be expected to decline by a whopping 40 percent. The share of doctors accepting Medicare would fall from about 90 percent to 54 percent.

Supporters of the Ryan approach might argue that fewer people would shift into the private plans, so the impact would not be that great. But then, what is the point of Ryan's Medicare reform?

Another defense might be that the government could simply raise doctor-reimbursement rates to encourage providers to continue treating a shrinking population of traditional Medicare patients. However, Ryan has not included the extra cost in his budget.

So, which is it, Mr. Ryan? Will your plan cause Medicare beneficiaries to lose access to their doctors, or are your budget numbers too rosy because you haven't counted the extra payments needed to keep doctors in the program?

Peter Orszag is vice chairman of corporate and investment banking at Citigroup and a former director of the Office of Management and Budget in the Obama administration.

© 2012 Bloomberg News

Comments
Editorial: Tampa Bay House members fail to stand up to Big Sugar

Editorial: Tampa Bay House members fail to stand up to Big Sugar

Big Sugar remains king in Florida. Just three of the state’s 27 House members voted for an amendment to the farm bill late Thursday that would have started unwinding the needless government supports for sugar that gouge taxpayers. Predictably, the am...
Published: 05/18/18
Editorial: Bondi holds drug industry accountable for Florida opioid crisis

Editorial: Bondi holds drug industry accountable for Florida opioid crisis

Florida Attorney General Pam Bondi’s lawsuit against the nation’s largest drug makers and distributors marks a moment of awakening in the state’s battle to recover from the opioid crisis. In blunt, forceful language, Bondi accuses these companies of ...
Published: 05/18/18
Editorial: A sweet note for the Florida Orchestra’s violin program for at-risk kids

Editorial: A sweet note for the Florida Orchestra’s violin program for at-risk kids

This is music to the ears. Members of the Florida Orchestra will introduce at-risk students to the violin this summer at some Hillsborough recreation centers. For free.An $80,000 grant to the University Area Community Development Corp. will pay for s...
Published: 05/17/18
Updated: 05/18/18
Trump backs off China tariff threat as China pumps money into a Trump family project

Trump backs off China tariff threat as China pumps money into a Trump family project

In barely six weeks, President Donald Trump has gone from threatening to impose $150 billion in tariffs on Chinese goods to extending a lifeline to ZTE, a Chinese cell phone company that violated U.S. sanctions by doing business with Iran and North K...
Published: 05/17/18
Editorial: Activism as seniors helps put Hillsborough graduates on the right path

Editorial: Activism as seniors helps put Hillsborough graduates on the right path

Lots of teenagers are walking together this week in Hillsborough County, a practice they’ve grown accustomed to during this remarkable school year.We can only hope they keep walking for the rest of their lives.Tens of thousands of them this week are ...
Published: 05/17/18
Editorial: Bondi holds drug industry accountable for Florida opioid crisis

Editorial: Bondi holds drug industry accountable for Florida opioid crisis

Florida Attorney General Pam Bondi’s lawsuit against the nation’s largest drug makers and distributors marks a moment of awakening in the state’s battle to recover from the opioid crisis. In blunt, forceful language, Bondi accuses these companies of ...
Published: 05/16/18
Updated: 05/18/18
Editorial: Johns Hopkins All Children’s should be more open about mistakes

Editorial: Johns Hopkins All Children’s should be more open about mistakes

A state investigation raises even more concern about medical errors at Johns Hopkins All Children’s Hospital and the venerable St. Petersburg institution’s lack of candor to the community. Regulators have determined the hospital broke Florida law by ...
Published: 05/16/18
Updated: 05/17/18
Editorial: St. Petersburg recycling worth the effort despite cost issues

Editorial: St. Petersburg recycling worth the effort despite cost issues

St. Petersburg’s 3-year-old recycling program has reached an undesirable tipping point, with operating costs exceeding the income from selling the recyclable materials. The shift is driven by falling commodity prices and new policies in China that cu...
Published: 05/15/18
Updated: 05/18/18
Editorial: HUD’s flawed plan to raise rents on poor people

Editorial: HUD’s flawed plan to raise rents on poor people

Housing Secretary Ben Carson has a surefire way to reduce the waiting lists for public housing: Charge more to people who already live there. Hitting a family living in poverty with rent increases of $100 or more a month would force more people onto ...
Published: 05/15/18
Updated: 05/18/18
Editorial: Voters should decide whether legal sports betting comes to Florida

Editorial: Voters should decide whether legal sports betting comes to Florida

It’s a safe bet Florida will get caught up in the frenzy to legalize wagering on sports following the U.S. Supreme Court opinion this week that lifted a federal ban. Struggling horse and dog tracks would love a new line of business, and state l...
Published: 05/15/18
Updated: 05/16/18