The Stanly News and Press (Albemarle, NC)

Opinion & Letters to the Editor

October 22, 2012

What’s the best approach to Medicare?

Monday, October 22, 2012 — I’m only a couple of years away from being eligible for Medicare, the federal government program to help senior citizens pay their medical bills. So as someone who will soon be using Medicare, I’m keenly interested in its future.

Unfortunately, according to most experts, Medicare’s future is in doubt. The reasons are simple. The number of seniors is growing rapidly, they are living longer and medical care costs have been rising faster than incomes.

The result: government spending for Medicare has been jumping off the charts and soon could comprise an unsustainable chunk of the federal budget. Therefore, all plans to slow the growth of government spending and borrowing have to address Medicare. The big question, of course, is how?

With the selection of Rep. Paul Ryan as a vice-presidential candidate, alternative approaches to restraining the rise in Medicare spending are now front and center in today’s political campaigns.

Ryan has developed a detailed plan for Medicare that is in sharp contrast to ideas outlined by President Obama and his administration.

Both approaches, the Ryan plan and the Obama plan, actually have the same goal of limiting the annual growth in Medicare spending to the growth rate in the total economy plus 0.5 percent. This is an ambitious goal, because it would cut Medicare’s growth rate of the past 20 years in half.

But the plans differ dramatically on how to accomplish this goal. The differences focus on the degree to which economics can or cannot be applied to our health care system.

The Ryan plan ultimately relies on the mainstay of economics, competition, to moderate the growth of Medicare. Following his ideas, Medicare recipients could choose among several private insurance plans for coverage of their medical costs. The government would financially assist seniors in the purchase of their plan.

The amount of subsidy would depend on the cost of the insurance plan chosen by the Medicare recipient. The government would establish a benchmark plan with certain features and reasonable costs. Seniors choosing a more costly plan would receive a smaller subsidy and likely have to pay more out of pocket, while seniors choosing a less costly plan would receive a larger subsidy and maybe even a cash rebate.

Additionally, all financial assistance would be calibrated to the medical condition of the senior, meaning the sickest seniors would receive higher subsidies.

The Ryan plan is placing a big bet that competition, one of the key features of economics, will keep Medicare costs in line.

For example, if insurance company A charges more for its policy than insurance company B does for the identical policy, then one of two things will happen. Either everyone will buy from B and A will go out of business, or A will reduce its price to be more in line with B.

So the essential idea of the Ryan plan is that seniors will now have a financial incentive to shop for the best insurance policy that meets their needs at the lowest cost, just like seniors and all consumers do with most products and services.

But not everyone thinks competitive economics works in the health care field, and this viewpoint is the basis of the administration’s proposal on controlling Medicare costs.

There are two potential issues that some analysts see in applying the traditional competitive model to health care. One issue is based on lack of information. Properly functioning competitive markets rely on consumers having enough knowledge and skill to evaluate alternative products and their prices and select the best one for their situation.

However, critics of applying the competitive model to health care say medical issues and medical insurance policies are simply too complicated for the average consumer to evaluate effectively.

Secondly, many say that health care — because it deals with life and death — should not be treated like other products and services and put in the hands of companies whose objective is to maximize profits.

Therefore, say these critics of the competitive plan, government needs to use its power to protect seniors by issuing regulations and promoting incentives to move the heath care system toward greater efficiency and improved outcomes.

Of course, supporters of the competitive approach have retorts to their critics, including that third parties as well as competing companies can provide the necessary information to seniors for competition to succeed.

But the larger point is that we now have a big debate about the best approach to Medicare. It’s one we all need to follow, because this is one of the biggest “you decides” we face today. As a senior citizen, I know I will be watching.

 

1
Text Only
Opinion & Letters to the Editor
  • Patrick Gannon Two sides in debate about film incentives

    RALEIGH – It’s looking like the current film incentives program may be scrapped for a much different grant program for TV and movie production companies.

    August 1, 2014 1 Photo

  • D.G. Martin Read others’ views to be better informed, decide for yourself

    “I don’t read The Washington Post. That is not where I get my ideas.”

    July 30, 2014 1 Photo

  • Patrick Gannon This isn’t medical marijuana

    As state legislators debated allowing the use of an extract from marijuana plants to treat seizure disorders over the past couple of weeks, it was evident that social conservatives – there are many of them in the General Assembly – felt a tinge of unease about it, even as almost every one of them voted yes.

    July 30, 2014 1 Photo

  • Doug Creamer Friends and contentment

    Last week I made my annual trip up the mountain to Sparta. My friends have a secluded home near a babbling brook. Their home and property are a haven for peace. It’s a two-plus hour ride to their home that doesn’t feel that long because I look so forward to my time with this great couple. When I arrive, the conversation seems to pick up right where we left it the last time we saw each other.

    July 29, 2014 1 Photo

  • Thanks for the honest deed

    I would like to thank the person that found my wallet in the parking lot of Harris Teeter on July 23 and turned it in to the Albemarle Police.

    July 29, 2014

  • cleaning supplies Don't judge mothers with messy homes

    I was building shelves in my garage when a neighbor girl, one of my 4-year-old daughter's friends, approached me and said, "I just saw in your house. It's pretty dirty. Norah's mommy needs to clean more."

    July 28, 2014 1 Photo

  • We need your help

    Hurray for the Albemarle City Council. Council plans to battle N.C. Department of Transportation’s ranking of all 13 projects in Stanly County to the bottom of their priority list. Council is setting up petitions in various city buildings for citizens to sign.

    July 28, 2014

  • Council asks veterans to seek office

    The terms of office for the leaders of the Stanly County Veterans Council ended June 30. A call is being sent to veterans council members requesting candidates for the four elective offices of the council. A meeting has been set for 6:30 p.m. Aug. 12 at the DAV building. All council members are urged to attend.

    July 28, 2014

  • Mike Walden The gains and gaps in our economy

    Twice a year, I pull out my cloudy crystal ball and attempt to make some predictions about the direction and pace of the North Carolina economy. I just finished my latest effort and, as usual, the results are a combination of pluses and minuses.

    July 28, 2014 1 Photo

  • Jason O. Boyd Yellow journalism takes on new form, people are dumber for it

    Time to get on the soapbox for a few minutes.
    Let me clear my throat. Eh ... hem!
    People are dumb.

    July 28, 2014 1 Photo

House Ads
Seasonal Content