Does GOP plan for Medicare, Medicaid amount to reform or destruction?

By Karoun Demirjian

Thursday, April 7, 2011 | 2:01 a.m.

Rich Miller almost died last year.

The 73-year-old retired public school teacher, who moved to Henderson with his wife, Janet, from New York City in 2002, was in average health for a senior citizen, until he contracted a freak infection during a precautionary biopsy of his colon.

“The bacteria raced to my heart, and my blood became poisonous. I was in very, very bad shape,” said Miller, who after eight months has made almost a full recovery.

His medical bill threatened to make his situation worse: For about 10 days in the hospital, the charge would be $200,000. But it was covered under his government insurance plan.

“I benefitted from Medicare. I would be desperate without Medicare,” he said. “A person on limited income, at my age, having to face that situation? If the illness doesn’t get you, the bankruptcy will.”

That’s not a dilemma Miller’s ever going to face, but it’s one that many members of the next generation may have to grapple with, depending on how Congress drafts next year’s federal budget.

House Budget Chairman Paul Ryan, R-Wis., is proposing a full reorganization of Medicare and Medicaid programs in fiscal 2012, to alleviate their staggering costs to the federal government.

The proposal, unveiled Tuesday, is only part of the Republicans’ answer to President Barack Obama’s budget request for next fiscal year. But together, Medicaid and Medicare make up the largest chunk of the federal budget — making their revision the most dramatic proposed change so far.

Under Ryan’s plan, Medicaid, the country’s health care program for the indigent, would be converted into a block-grant program administered by the states; and Medicare, the coverage provided to Americans 65 and over, would be converted into privatized accounts partially supported by government subsidies.

“Medicare spending is growing at a rate of 7.2 percent every year. This is more than twice as fast as the nation’s economy is growing,” Ryan wrote in the summary of his budget, called “Pathway to Prosperity.”

“The unchecked growth of the Medicare program cannot be sustained,” Ryan continued.

No state’s experience has shown that to be the case more acutely than Nevada’s.

According to the Census Bureau, Nevada’s senior population increased by 30 percent from 2000 to 2008, or at a rate about four times the national average. According to a 2010 count by the Kaiser Family Foundation, 348,168 Nevadans are enrolled in Medicare; the state demographer’s office, however, predicts that in the next 15 years, that number will almost double.

It’s not just about the elderly though. In the past year, applications in Nevada for Medicaid — the program that insures the poor — rose 60 percent, a spike officials credit to the state’s abysmal economy, especially as exhibited in nation-leading unemployment and foreclosure rates. State Medicaid administrators expect the number of Nevadans receiving Medicaid to grow from 280,000 currently to 312,000 by 2013.

But the scene in Nevada is only a more pronounced picture of the struggle going on at the federal level: In both places, a growing need for services is butting heads with a growing need for budget cuts.

Gov. Brian Sandoval’s proposal to reduce Medicaid reimbursements to hospitals by 5 percent is the kind of measure Ryan is referring to when he says states’ insufficient coping choices necessitate reform.

But Democrats say the proposal is destruction under the guise of reformation.

“Nevadans cannot afford this irresponsible proposal that tries to balance the budget on the backs of seniors while protecting government giveaways to big oil companies and corporations that ship American jobs overseas,” said Senate Majority Leader Harry Reid, calling the plan “extreme.”

“The idea of cutting Medicare and Medicaid is so outrageous, so unreasonable, and so unacceptable that I can’t believe the Republicans have the nerve to suggest it,” said Rep. Shelley Berkley. “The way we do health care in this country is bass ackwards — we should be putting our resources into prevention. Cut Medicaid, you’re pulling the rug out from under needy families ... Undermine Medicare, and you undermine the whole health care system.”

As a caucus, Democrats have gone so far as to call the Republicans’ proposal hypocritical for appearing to adopt the same model of pooled insurance plans, aimed at bringing down rates, that undergirds the health care law Republicans have been trying to dismantle in the name of — among other things — saving Medicare.

“It looks to us like they have kept the very savings in Medicare that they railed against over the last couple months and years,” said Assistant Minority Leader Chris Van Hollen, D-Md. “They don’t reform it, they deform it. They take away the Medicare guarantee for seniors, say you’ve got to go into the private insurance market. And all the risk of increased costs in the health care system will be borne by the Medicare beneficiaries.”

But Republicans stress that Ryan’s proposal is saving Medicare from its own financial ruin — even the Obama administration has admitted that Medicare’s trust fund will run out by 2017 — by taking the opposite approach of the health care law: letting individuals and states make decisions for themselves.

“The Medicaid block grant program allows states to design whatever type of programs they want to,” Rep. Joe Heck, R-Nev., said. “And people 54 and younger, once they’re 65, will be able to have a patient-centered, more personalized approach to their health care. They’ll be able to have the same type of insurance that members of Congress do.”

Although that may be the goal in theory, it’s not yet clear that, in practice, the program will yield that result.

The GOP budget stresses that the Medicare revision is not a voucher program.

But the key difference between their proposal and, for example, insurance plans under Medicare Part D or Medicare Advantage insurance plans — which are administered through private insurance companies and serve as one model for Ryan’s plan, Heck said — is that the government is the only negotiator in the current system. That gives it tremendous bargaining power.

Pull the behemoth of the government arbitrator away, and seniors would be left to fend for themselves on the open market with their annually determined subsidy; not exactly the most convincing bargaining position if you require a higher-than-average amount of medical care.

“Could you imagine me taking a voucher to an insurance company? Would they give me coverage with this voucher that he’s offering?” said Miller, incredulously. He and his wife, Janet, currently pay $108 each for Medicare coverage, which covers 80 percent of their medical expenses; a teachers union supplemental insurance program helps them cover the rest.

That’s precisely why Medicare was created in the first place: to insure a senior population that was almost uninsurable.

And since it was introduced in 1965, Medicare has been extremely popular — almost sacrosanct — among those it covers: every senior citizen in the country.

“I don’t want government-run health care. I don’t want socialized medicine,” a woman wrote to Obama in 2009. “And don’t touch my Medicare.”

The comment has inspired plenty of political jeering, but taken at face value it illustrates the distinct spirit of protectionism that exists around Medicare, even among vocal critics of the country’s health care system and Democrats’ attempts at reform.

Consider this as well: The senior population of the United States is a more reliable voting bloc than any other segment of the population, turning out in almost twice the numbers of the youth vote, and voting more conservatively across the board than younger age brackets.

That makes for risky political calculus in going after Medicare. And that has formed a backdrop both for how Ryan has been praised for his principled, balance-sheet-driven approach for his fiscal 2012 redesign of the social contract, and how his party has been criticized for smothering the message.

Backers of Ryan’s proposal are quick to say the budget doesn’t affect anyone who is a senior today.

“The budget does not change Medicare for anyone 55 or older and protects those who are currently in the system. The reforms in this budget are about preserving the program for future generations by implementing cost-effective measures,” said Stewart Bybee, communications director for Rep. Dean Heller, R-Nev.

But that political calculation assumes that seniors will be focused solely on themselves, to the extent that they won’t care what happens to the generation 10 years or more down the pike.

“Whenever there has been a social program, whether it be the first Social Security program, or now, we’ve always had to make certain adjustments,” said Miller, who spent 45 years teaching U.S. history. “I believe that we’ll be able to get through the Medicare process and that it’ll be there for my children ... and God willing, we’ll live to be 120. But as you get older, you get to know how fragile life is.”