Paul Ryan’s Medicare Plan
- By Simple Politiks
- 19 August, 2012
- 12 Comments
I’ll explain the basics of Paul Ryan’s plan in this post.
Medicare has become the newest political talking point of the upcoming presidential election ever since Paul Ryan became Romney’s VP pick. A lot of people have heard great and horrible things from Republicans and Democrats, so there’s certainly some confusion surrounding this topic.
What are the Problems With Our Current Entitlement Programs?
First people need to realize that the current version of Medicare (as well as the other entitlement programs) is unsustainable. At some point in the near future, most likely my generation’s future, the programs would collapse if left unassisted. Our nation would be under an enormous amount of debt and we could be in the same situation as present-day Greece.
With that in mind, there’s obviously a need to reform Medicare. It’s just a matter of “When will it happen?” and “How much will we have to change/sacrifice?” I don’t think it’ll be a smooth transition from what I’ve seen with our budget. I’m no economist and I’m not qualified to give out expert opinions or anything… But if you look at our budget, the problem is very apparent.
Big change will have to occur.
What Is Paul Ryan’s Solution To Our Medicare Problem?
So we’ve established that there are some major flaws within our current system. Naturally, if we hope to maintain these incredibly beneficial (and costly) programs, our next step is to make some changes; we must reform the programs. This is where Democrats and Republicans differ.
Paul Ryan’s controversial plan would turn Medicare into something called a premium support plan. In this type of plan the government would offer seniors a predefined amount of money to spend on health insurance. The plan would give vouchers to seniors which would allow them to purchase either private insurance or traditional, government-run insurance on an exchange.
The plan would go into effect in 2023. This means that no person over 55 would see any changes to Medicare.
The end result would go something like this:
Private insurers would compete with the traditional Medicare program to offer the best plan possible for the level of “premium support” that a senior gets. Once a senior had a plan, he would have to pay out of pocket for any health care costs the voucher couldn’t cover. – Stephanie Condon, CBS Report
How Would Paul Ryan’s Plan Work?
The federal spending dedicated to Medicare would have to be capped at some point for this program to work. Paul Ryan’s plan has chosen to cap spending at half a percentage point higher than the growth rate of the economy.
But why does Paul Ryan think it’s a good idea to create a voucher system with public sector/private sector competition? Because he believes the competition will force private insurance companies to lower their prices. The fundamental change that Medicare will go through may compel seniors to spend less on health care, thus compelling health care providers to accommodate for the new demand by lowering prices.
Will Paul Ryan’s Plan Cost More? Is It A Good Plan?
Hard to say. In theory, yes it could cost more. Probably will. It is tough to force a market which is so fragmented (like the insurance industry) to let the market power control prices. Also, according to Uwe Reinhardt, a health care economist at Princeton University, there is no evidence that the growth of health care spending will correspond with the rate of economic growth. Many experts believe health care will jump back up to higher levels when the economy improves, as opposed to the lower levels we’ve been experiencing recently. Drastic jumps could lead to higher prices.
Critics are weary of this plan, it is certainly the most extreme reform on the table. As I said before, I’m not exactly qualified to go into a deep analysis… so unfortunately I am not absolutely sure if Paul Ryan’s reform plan is the right path or not. We’re going to have to sacrifice more if we want to keep these systems running. In that sense, it looks like Paul Ryan is on the right track. But, again, I can’t say that with much certainty, it is just my opinion.
One thing is for certain: any reform is going to be worse than our current system in some way(s). That’s just what happens when we have to accommodate for a much larger population with stringent monetary funds.
I hope this quick article was informative. Please correct any false information by posting the correction in the comments section. Just supply a reliable bunch of sources which prove your claim and I’ll edit my post. I don’t think I misconstrued anything, though. Well, I hope!
See you next time! Be sure to subscribe and like my Facebook page!
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an important point is that ryan reduces Premium support for upper income. I believe the most reliable source to cite is the plan itself not some interest group no matter how prestigeous.
That’s true, it would be the most accurate and detailed. If you could give me a link then I’d definitely put it at the top of the post.
For a quick synopsis of the plan this is an excellent commentary. I have to congratulate you on your work and efforts. You are considerably ahead of the pack.
Unfortunately, I imagine it will still be too much for most and will go over their heads. If you could just put it in a format with some dancing celebrities or a bunch of losers trapped in a condo for a couple of weeks or on a desert island, and get some bikinis, then you might get an audience.
In the meantime, voters are just going to vote for celbrities dancing and conspiring and rely on the media to tell them what to think. I hate it when I am right.
Don’t even get me started on this one …. so here’s an article that does a great job of summarizing what’s really going on here: http://politic365.com/2012/08/18/medicare-the-716-billion-dollar-lie-and-paul-ryans-first-week/
My thoughts are this – if the Ryan plan is so great, why do we have to wait until 2023? Why doesn’t it kick in immediately like Obamacare did when it eliminated the donut hole for seniors?
The reason why it is phased out slowly instead of all at once is because people that have been planning for retirement have to factor in costs such as health insurance. If there is a sudden change you are endangering those whom have planned around what is currently in place. Say you joined the military and when you signed on you knew that after 20 years you will get a pension. Now what if you were approaching retirement and you planned your retirement around that pension but now people want to change it now that you are 2 years away. If you would have known 10 years before that the pension benefit won’t be there you would have time to plan for that change. You wouldn’t even be at the halfway point in your career and you would have a better grip over your future, you could decide that 10 more years isn’t worth it and pursue a different career.
It is the same in this case, if it was immediate it would change the way the program worked and you would have zero time to plan for it. Not to mention the uncertainty of it all. Just look at Obamacare, a lot of the details still aren’t hammered out and the future of the program is uncertain. Look at Social Security it is a horrible program and it needs to be abolished, but I would never institute the change immediately because there are many people that had poor planning and couldn’t handle a change of that magnitude. Plus many people around the age 45-60 would be pissed because they paid into it their whole lives and won’t get a cent out of it. Instating a cut off like age those whom are age 40 will get it, and those who are younger wont get it, but everyone will still have to pay into it till the age of 30 for the next 40 years at that point the program will be completely abolished. It is a horrible program because if I took the amount taken out by social security and rolled that into a roth IRA I would have millions of dollars by retirement instead it is used to fund a horribly inefficiency program wasting my hard earned money leaving nearly
nothing for me when I get to retirement.
If you would like to read more about my rants on economics, investing, and just life check out my blog at sean-life.com
good answer, thank you
Sorry, but I am not interested in reading more fantasy.
[You write] …”Look at Social Security it is a horrible program and it needs to be abolished, but I would never institute the change immediately because there are many people that had poor planning and couldn’t handle a change of that magnitude.”…
Do you even have ANY IDEA what it was like for old people in America before Social Security and Medicare?
[You write] … “if I took the amount taken out by social security and rolled that into a Roth IRA I would have millions of dollars by retirement…”
Are you not aware that 1.6 MILLION CHILDREN in America are homeless? A simple knowledge of the meaning of the word “average” dictates that you understand that a full HALF of our citizens MUST be below it in ability, IQ and ambition. And your plan is that they all will become “millionaires” by investing in the Stock Market?
Or, do you just plan on them expiring and thereby decreasing the surplus population? No wonder Republicans feel the need to own lots of guns! The game of Monopoly only ends two ways friend. Those that through luck or skill end up with more than they need either give it back so the game can go on…. Or…. History shows, it is taken back for the sake of survival. Wise men NEVER are foolish enough to let it come to that, if they intend to keep their heads on their shoulders.
I am pleased to tell you that you have been nominated by me for the Lovely Blog Award. You can pick up your Award and see the rules for the Award at http://painfighter.wordpress.com/2012/08/21/lovely-blog-award/. Congratulations!!
Thanks for wandering over to my blog and liking my recent post.. it then gives me the opportunity to visit yours… am going to “follow” your blog because I think that you touch on very relative issues and I enjoyed this post… I had wondered what all the fuss was about with the Ryan plan (yes Gasbagger I am currently watching Big Brother.. but Dancing with the Stars doesn’t start until mid-September so I have to do something with my spare moments!) LOL… and Desean1625 thanks for explaining the reasoning behind the 2023 start up date. I thank you Simple Politiks for putting things in simplier terms for us and giving a stage for people to have conversations…
It’s my pleasure. I’m just doing what I enjoy.
This is a very useful blog. I look forward to your posts
Do you know that, when you retire and finally receive Social Security, that income is taxed? That’s right! You have to pay tax on income from a plan you’ve been paying for your whole life! That needs to be revised. Then there’s the CAP on Social Security tax, which is about $105,000. That means if you earn a million dollars in one year, SS tax will only be taken on the first 105,000. How is that rational? The SS fund can also be raided to pay for other items, like wars and bailouts. Before deciding to just cut benefits to seniors and disabled persons, how about correcting some flaws in the system? Once the baby-boom bulge passes, wouldn’t costs also decrease. So maybe the trend is a temporary bump?