As the health care community waits with bated breath to see what will become of the Affordable Care Act under the Trump administration, Republicans in Congress have set their sites on another health-related initiative that has been on their wish list for years: reforming Medicare. While Trump promised throughout his campaign not to change the fundamental ways in which Medicare works — in part to appeal to older voters, who overwhelming would like the program to stay as it is — shortly after the election, “modernizing Medicare” appeared as a priority on the transition website for the new administration.
The reform many Republicans are pushing for — championed by Speaker of the House Paul Ryan (R-WI) — is privatization along the lines of Medicare Advantage. Instead of providing for full insurance coverage through the government, as traditional Medicare currently does, Ryan’s proposal would have eligible patients purchase insurance from private companies with financial assistance from the government. The theory is that by having private insurers provide coverage, Medicare will capture efficiencies of the private market, while simultaneously offering consumers more choice in the coverage they receive.
After Paul Ryan first unveiled this plan in 2011, the Kaiser Family Foundation released a report detailing the significant fiscal problems with this “modernized” vision of Medicare. According to the Foundation’s analysis, the average out-of-pocket expense for beneficiaries increase from $5,630 under the current system to $12,500. The reason for this increase, according to the Congressional Budget Office, is that providing coverage is actually more expensive for a private insurer than it is for the government. The proposal faces other economic challenges as well, and ironically, some of them stem from its close resemblance to Obamacare.