Sunday, May 1, 2011

U.S. Chamber "Commends" Paul Ryan For Privatizing Medicare

Original Link:

By Matt Trojan

Earlier this week, the U.S. Chamber "commended" House Budget Committee Chairman Paul Ryan’s long term budget proposal that – the Wall Street Journal explains – would "essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills." By pushing Medicare recipients into the private market, the health insurance industry plans to profit royally on the backs of seniors.

Privatizing Medicare will generate an entirely new market for the health insurance industry and according to the non-partisan Congressional Budget Office (CBO), increase the cost of health insurance for seniors:

A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare.

Using the CBO’s estimates, the Center for Economic and Policy Research explained that the Ryan plan could shift as much as 68 percent of health insurance costs to seniors:

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit (Figure 1). This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

Ironically, it was just last fall that the U.S. Chamber spent millions of dollars on attack ads against members of Congress that supported the Affordable Care Act for allegedly supporting "cuts" to Medicare. Not only does this smack of hypocrisy, the charge was repeatedly debunked and discredited. For instance, as notes, the U.S. Chamber attacked Democratic U.S. Senate candidate Jack Conway of Kentucky for "cutting Medicare by 500 billion dollars." Watch:

Now, the U.S. Chamber is hawking Ryan’s decidedly un-serious budget proposal.

In a letter to members of Congress praising Ryan’s budget, the U.S. Chamber attributed entitlements as "the biggest reason for this long-term debt explosion." Yet, the underlying math behind Ryan’s budget is nothing short of dubious.

Ryan’s plan is based upon wildly optimistic budget assumptions that anticipate another housing boom and places the unemployment rate at the lowest point since 1953 – all within a decade. This is not just extremely unlikely; it ignores forty years of Federal Reserve policy:

It’s worth noting that this is not just unrealistic, it’s impossible. When unemployment drops beneath 5 percent, the Federal Reserve starts raising interest rates until a recession pushes it back up. This is deemed necessary to prevent inflationary wage increases.

Of course, back in 2001, Heritage also wrongly predicted that the first Bush tax cut would yield 1.4 million jobs by 2010 (in actuality, payroll unemployment was at 2001 levels). Heritage’s analysis is so off-base that New York Times columnist and Princeton economist Paul Krugman noted that Heritage appears to have altogether removed the unemployment data from their study.

No comments:

Post a Comment