Medicare, Just Elderly Welfare Queens: And What IS Insurance, Anyway?

Paul Ryan, the Republican Representative from Wisconsin tapped by the Republicans to try and sell their plan to destroy Medicare, has classified Americans who are part of the Medicare program as being just another example of the underclass seeking welfare entitlement. (Note emphasis added in following.)

During a speech at the Economic Club of Chicago yesterday, House Budget Chairman Paul Ryan (R-WI) defended his proposal to privatize Medicare for future retirees, arguing that the plan would empower seniors to “deny business to inefficient providers” while President Obama’s proposals to reduce the growth of the program would “give government the power to deny care to seniors.”

As TPMDC’s Brian Beutler notes, Ryan went even further. He likened Medicare to welfare, as if to imply that the program was some sort of government hand out to seniors:

RYAN: As we strengthen welfare for those who need it, we propose to end it for those who don’t. We end wasteful corporate welfare for those such as Fannie Mae and Freddie Mac, big agribusinesses, and others that have gotten a free ride from the taxpayer for too long.

Ryan Likens Medicare To Welfare In Speech, But Tells Town Hall Seniors Are ‘Entitled To The Benefit’

Frankly, I am not sure what planet Mr. Ryan is from. I have seen not only no evidence of putting an end to corporate welfare, but honestly, if corporate welfare were ended by Congress, and proper collection of corporate taxes and taxes on the rich returned to reasonable levels and were enforced, with no loopholes, there would be no Federal deficit. End of story. The one thing most wrong with this nation is corporate welfare, bailouts, corruption, and “too big to fail” companies that need government support to save them from their failures.

But that is another story. What we are talking about here is the attempt by the Republicans to demote and denigrate the elderly on Medicare to the status of welfare queens. After all, they have been so successful with their past campaigns of demonization of target segments of the electorate, recently upping the ante and telling us that unions, teachers, firemen and policeman are the great drain on the economy, why stop now?

But it occurs to me what is totally missing from the Republican definition of the problem is the very simple and straightforward issue of just what is medical health insurance, anyway?

The Republicans seem to think that everyone, even those Americans at the poverty level, if they just set aside enough savings, will have plenty of money to cover all their medical expenses. After all, isn’t personal responsibility the watchword of the Republicans?

But that is not how medical insurance works. That is never how it has worked, since it’s current incarnation started really less than 100 years ago, nor is it how any insurance works.

For the average elderly person in American, having enough savings in the bank to cover the expected costs under the Ryan plan might be a tiny bit problematic. The average monthly Social Security benefit for the elderly in America right now is the princely sum of $1,077.20. That is a magnificent 12,926.40 a year. Now if you have looked at the projected costs of Ryan and the Republicans’ plans for killing Medicare and replacing it with a voucher program, you will recognize right off that that is already about $8,000.00 short of the projected $20,000.00 per year the program is going to cost each American on the Republicans’ plan in just a few short years. And that’s just the beginning. One has to stop and wonder where the food for housing and shelter is going to come from. Of course there are those who want to destroy Social Security, too, thus insuring a run on cat food by the elderly.

For those not yet on current Medicare, I would just point out that a couple can expect to cough up monthly expenses of around $600 – $700 for Medicare premiums (yes, you still pay premiums while on Medicare), for Supplemental Part B insurance with a carrier to help cover what Medicare does not, and for premiums for Part D to cover prescription drugs. And that is not participating in purchasing so-called Medicare Advantage, which was an earlier effort to slip privatization into the Medicare system. If you go that route, plan to have even more money available for premiums and costs. Those amounts do not include co-shares and costs of drugs NOT covered by the prescription drug plan, which can run into the thousands of dollars if you find yourself needing serious ongoing prescription drugs, or if the drug you need is not included in the supported formulary of your Part D plan.

But that is because those dollars are paying for insurance.

Insurance is really very simple. It is a consciously chosen risk on the part of the person paying into the insurance pool. It is a risk taken knowing in advance that all or part of the premiums paid into the risk pool will be lost, i.e. the insured may never see a single thin dime for all the money paid into the insurance pool. The pool is established so that all participants can draw on it in time of need.

That is what insurance is. It is like gladly paying taxes so your municipality can purchase fire engines, and a fire house, and pay the salaries of fire fighters. You may turn out to awfully glad they exist if your house ever catches fires and threatens to burn to the ground. If your house never burns, do you feel it was wrong to pay into that risk pool? I know some Republicans seem to think so. Until a burns to the ground because of a forgotten payment, and the privatized fire department just stands there and watches it burn.

Stop and ask yourself: when was the last time you got a check from your automobile insurer when you did NOT have a wreck? I suspect it was not lately.

The insurance is there to cover you when you do have a loss, because that loss is going to be expensive, and the more expensive the car, the more expensive the loss is going to be.

The same principle applies for medical insurance, except expenses on a person’s body repair will skyrocket a whole lot faster than auto body repair.

95% of the population will never, ever have enough saving or cash reserves to cover the all of the costs of extraordinary treatment in the case of severe medical emergency, such as cancer, organ transplants, or other incredibly expensive treatments to restore health or save life. The coverage for those costs comes from the shared risk pool, into which willing participants contribute, hoping they will never have to draw back out for catastrophic illness, but knowing the coverage is there if the worst does happen.

And the real travesty for this nation is that this is not being discussed in the current debate about the Republican plan to destroy Medicare.

The majority of those who pay into the pool for health care may never, ever see much or any of that money spent on health care insurance for themselves. Because, if they are lucky, they will be among the majority who do not experience threats to their health requiring great expenditure and cost. In fact, stop and think about it. Wouldn’t you be glad to have lost this particular bet, and have to suffer from good health? But isn’t it reassuring to know you invested in the risk pool, in case you do experience illness requiring catastrophic level expenditures? Costs that you would never, ever be able to meet out of your actual income, much less the tiny amount you would be able to set aside as medical savings after all other expenses?

One other note, in case you are still waffling on the need for this insurance risk pool for the elderly. Old Age is the Ultimate Preexisting Condition.

Just a few points on these definitions to make this clear.

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer’s promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.

Insurance. Wikipedia.

Health insurance is insurance against the risk of incurring medical expenses. By estimating the overall risk of health care expenses, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.

Medical Insurance. Wikipedia.

Of course this goes to the heart of the problem facing America. For the past hundred years, the insurance industry has thrived as a profit driven corporate institution. And those benefiting from those profits do not want to give them up.

The problem is, the requirements of health care and the population of this nation has simply outstripped the ability of the system as it exists to continue to simultaneously do both tasks: 1) provide the same continuing massive profits, 2) provide adequate health care coverage to the majority, including the very ill, the elderly, and those needing extraordinary care that modern medicine can often provide. And of course the fact that 40 – 50 million Americans live without any health care insurance just adds to the burden on the system.

America needs to demand that Congress insure that Medicare continues as affordable insurance, into which all citizens pay through payroll taxes their entire lives, and on which all citizens in retirement and old age can depend for equitable and affordable health care. The system needs to stay in government hands, to insure the same current incredibly low overhead cost rate, and to insure that it will not be looted by the corruption so clearly rampant in the private institutions in our society.

Of course, and if I had my way, there would be optional Medicare for all, universal single payer health care, managed and under the control of the government, to insure that costs are low, and the only overhead costs are those required to maintain the administration necessary to administer the system. And there would be no CEO salaries of tens of millions of dollars a year, while 40-50 million Americans go without healthcare.

Of course this would mean an end to much of the for-profit private insurance industry. And you know what? I am perfectly alright with that. Let those who want to continue to buy additional or separate insurance from such companies, which will then, as they do now, do everything in their power to refuse them coverage for preexisting conditions, or refuse them coverage after the fact under whatever rationale their claims department can cook up. That’s what they have been doing for decades. That’s OK with me if people really enjoy submitting themselves to such treatment.

I don’t. I would rather pay into a risk pool that is there for me and my family when it is needed.

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; Rep. Paul Ryan, R-WI; 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