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Am I Crazy or is Privatizing Medicare Insane?

Paul Ryan (Courtesy the Chicago Tribune)

OK, I will be the first to admit, I did not study economics. I spent four years of college reading books and writing papers, and some of those papers were admittedly about fairy tales for a class about fairy tales.

Yet I feel as though Paul Ryan and his “courageous” proposal to slash the deficit by turning Medicare into a government-issued voucher to old people so they can buy their own insurance is like throwing the baby out with the bathwater and then stabbing the baby with an ice pick.

We just had this whole massive health care debate a year ago in which the Right spent much of its energy vilifying the left for it death panels and cuts to Medicare. Yet what Ryan would do is to remake Medicare so fundamentally that seniors would no longer even recognize what they were dealing with (and conveniently it would not be current Medicare participants but, you know, the voters who are not old yet and not worrying about it as much).

And stop me if I’m absolutely crazy, but how the hell would a private insurance pool composed entirely of the elderly work? They’re all on their way to health problems and end of life care. They are all going to be using up gobs of money, so there is virtually no way to spread the risk. It’s like insuring only NASCAR drivers. The market would have to be so highly regulated as to essentially become another government program (though Ryan’s vision does not mention any regulations on insurance companies and obviously dismantles the Affordable Care Act).

The Right also hates the Affordable Care Act’s individual mandate, yet as everyone with even a humanity major’s most basic understanding of economics can tell you, it’s either that or “socialized medicine.” You have to have healthy people in the same pool as sick people or allow private health insurance companies to pick and choose who they cover to the detriment of the poor, the sick, and eventually, you, the middle class.

Furthermore, does everyone understand how Ryan’s plan will save money? It expects seniors to be rational actors and informed consumers in their health care decisions. I’m not a defender of Medicare’s current state, which is obviously unsustainable. Yet by giving seniors a set amount of money and saying, “OK, figure it out” means that they will have to decide if they need this cancer screening now or that pill then or this stent here or that bypass there. Doctors, on their fee-for-service model, will still have incentives to guide them toward the most expensive tests, drugs and procedures.

This–and stop me if I’m just a stupid English and History major–will lead to seniors blowing through their alloted Medicare voucher. Especially if it’s tagged to inflation at 2.1% as Ryan proposes, yet medical inflation continues at 2.9%. And what do you bet will happen then? Well, if they have children, they’ll turn to them. If they have savings, they’ll dip into that, and generally as the cost of medical care rises this deal will look more and more insane.

According to the Congressional Budget Office seniors would end up paying almost twice as much out of their own pockets — more than $12,510 a year.

Oh, and Ryan’s “courageous” plan, for which too many smart people are essentially giving him a free BJ cuts taxes for corporations and the wealthy (again [again]). The government loses $4 trillion in revenue because he’d lower the top rate from 35% to 25%.

To say this is “courageous” is to ignore what the word actually means.