Rep. Ryan’s Plan to Destroy Medicare is a Windfall Plan for Private Insurance Profits

Wendall Potter, famous as whistleblower regarding the unethical and even criminal actions by CIGNA and the insurance industry’s focus on profits over patient coverage, has spoken out on Rep. Paul Ryan’s and the Republicans’ plan to destroy Medicare and replace it with vouchers for purchase of private insurance: Ryan’s Medicare Plan Would Be a Windfall for Insurance Companies .

Rep. Paul Ryan’s plan to privatize Medicare would accelerate a trend started several years ago by corporate CEOs and their political allies to shift ever-increasing amounts of risk from Big Business and the government to workers and retirees.

If enacted, the Ryan plan would represent a windfall of unprecedented proportions for insurance corporations and other businesses.

Ryan, chairman of the House Budget Committee, wants to dismantle the Medicare program and replace it with a system of vouchers. Starting in 2022, the government would give the average 65-year-old Medicare beneficiary $8,000 a year to buy coverage from a private insurer. That’s the amount health care analysts estimate will be what the Medicare program will spend on every 65-year-old in 2022 if the government doesn’t turn it over to private insurance companies.

The amount of money commercial plans actually spend to pay medical claims has been declining rapidly over the past several years while the amount they spend on administrative activities such as marketing and underwriting — and to pay executives and reward shareholders — has been increasing. That’s why Congress included a provision in last year’s health care reform law to require insurance firms to spend no more than 20 percent of their policyholders’ premiums on overhead. By contrast, the current Medicare program spends just 3 percent of its budget on administration.

The nonpartisan Congressional Budget Office says the $8,000 voucher won’t be nearly enough for seniors to buy comparable coverage from private insurers and pay the additional out-of-pocket costs that those insurers would require them to pay. The amount the average 65-year-old would have to shell out to buy private insurance in 2022, according to the CBO, will actually be $20,510. Seniors would have to pay the difference — $12,510. If Medicare is not privatized, the difference would be $6,150.

Here’s why this would be a dream-come-true for the insurance industry: The more health plan enrollees have to pay out of their own pockets, the less insurers have to pay for medical care. The money that insurers avoid paying out in claims goes straight to their bottom line — and into shareholders’ pockets.

Insurers have been shifting more and more of the cost of care to their policyholders over the past several years by enticing — or pushing — them into plans with ever increasing deductibles. This trend is part of what Yale professor Jacob S. Hacker called “the personal responsibility crusade” — making people more responsible for the management and financing of the major economic risks they face — in his 2006 book, The Great Risk Shift.

This crusade has been led by Republicans and insurance company executives who have been saying for years that the best way to control medical costs is for Americans to have more “skin in the game.” That’s an expression that former Aetna CEO Jack Rowe used often before he retired in 2005, the year he made $22.2 million. It was also a sound bite favored by the CEO I used to work for, CIGNA’s Ed Hanway, before he retired in 2009. Hanway’s total compensation that year was almost $111 million.

The problem is, most Americans have far less skin to put in the game than CEOs like Rowe and Hanway or even Rep. Ryan, who makes $174,000 as a member of Congress. The median household income in the United States was just $49,777 in 2009, which was down $335 from 2008.

I have written about this before, and really, to any Republican reading this, I mean these statements to be factual statements, not made up stuff like Republicans spout on the floors of the Senate and House.

1. Social Security is completely unrelated to the current deficit. Social Security does NOT borrow money and “saddle our grandchildren with debt”. Social Security is pay-as-you-go. Today’s SS payroll taxes pay for today’s benefits (actually a bit more). It will continue to do so, even with demographic changes (baby boomers retiring) through the next 30+ years

2. Medicare functions at an overhead cost of only 5%. Private for-profit insurance functions at an overhead cost of over 17% , with some sources estimating as much as 30%%. In fact, the United States wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured.

Of course this explains it all. It is, for the Republicans and the corporations, all about the profits. It is never about the sick, the elderly, the working classes, or the poor.

Paul Krugman, the Nobel Prize Winning economist, points out in his New York Times column that Patients Are Not Consumers.

I keep encountering discussions of health economics in which patients are referred to as “consumers”, after which the usual mantra of freedom of choice is invoked on behalf of voucherizing Medicare, or whatever.

Medical care is an area in which crucial decisions — life and death decisions — must be made; yet making those decisions intelligently requires a vast amount of specialized knowledge; and often those decisions must also be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.

The idea that all this can be reduced to money — that doctors are just people selling services to consumers of health care — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values.

The Republicans seem to have chosen 2011, and their majority in the house, and the governorship in several states, among them Wisconsin, Michigan, and Ohio, as a moment to see just how far they can push their radical, right-wing agenda.

That agenda includes the goal of destroying Medicare, Medicaid, and Social Security, and this past week even the food stamp program became one of their targets. If you are middle class or poor, if you are a woman, you are a member of the underclass, and you are a target of the the Republicans, and sadly, too many Democrats in Congress.

If you are old and poor, you are really in trouble.

The Average monthly Social Security benefit for a retired workerwas about $1,177 at the beginning of 2011. This amount changes monthly based upon the total amount of all benefits paid and the total number of people receiving benefits.

According to my calculator, that is a princely annual total of $14,124.00. Not even enough to cover the estimated real costs of over $20,000 a year that the Republican plan will cost the elderly. Remember, look at the average income of those 65 and older, not those in the middle of wage earning years and their incomes. What are the elderly dependent on Social Security supposed to do for shelter, food, and other necessities? This discussion has not even touched on the cost of prescription medicines, which is handled outside the basic Medicare program being discussed here.

For senior citizens whose total social Social Security checks for a year are just a few thousand dollars a year, under this Republican plan, those payments will not even cover the cost of the privatized Medicare plan proposed by the Republicans. You might as well just go ahead and call the Republican plan for the elderly what it is: Just Hurry Up and Die Already.

And as we have seen in Wisconsin, the average workers of America, who historically were the strength and promise of this nation, are the new targets of the far right. The Republicans have made it their goal to destroy the ability of unions to organize and work on behalf of teachers, policemen, and fireman. They are the new enemy of the Republican party and its corporate and super-rich masters such as the Koch brothers and their ilk, who have been providing the funding behind the astroturf Tea Party.

Recent polls show even those who claim they are members of the Tea Party are opposed to cuts in Medicare, by a whopping 70% majority!.

In Wisconsin, the Republicans have been caught paying out-of-state firms to come in and collect signatures for recall elections against Democrats, with the Republicans paying these signature collectors per signature. And it turns out some of them were criminals. This is all of course a violation of Wisconsin law. But the Republicans in Wisconsin could not find a volunteer force to collect signatures, so they had to cheat. What else is new?

Of course the real question is whether the majority of the Americans, especially those 20 and 30 years out from retirement, are paying attention, and have any clue the nightmare that will be facing them if Social Security and Medicare, two of the greatest accomplishments in the history of this nation, are destroyed by the Republicans. You really have to stop and ask yourself why they hate these successful programs? They operate with less overhead and more efficiency than any existing comparable privatized service. They operate secured by the controls put in place legally to protect the funds accumulated, especially in the case of Social Security.

But then, given the profiteering and the looting that have characterized the wars in Afghanistan and Iraq, and the gaming and criminal acts in the stock and hedge fund and mortgage markets in the past few years, it is not surprising that the super rich, who clearly just cannot get enough, are not happy that they cannot subvert and suck the money out of these programs, too.

There is really one simple goal behind all of this: to line their pockets even more. Why stop with most of the wealth if you can have it all?

It is certainly clear that insuring a safe existence and adequate medical care for the elderly is not their goal. Far from it. Remember the Republican medical plan comes down to this: Just go to the emergency room, or hurry up and die already.

This post has been faxed to Representative Todd Young, IN-09; Indiana Senators Dick Lugar and Daniel Coats; The White House; House Speaker John Boehner; Senate Majority Leader Harry Reid; House Minority Leader Nancy Pelosi; and Wisconsin Representative Paul Ryan, and and posted on this web site, The web site provides links to documents on the web supporting the statements in this letter.


Author: Ron