Medicare expansion more costly, less coverage, with no out-of-pocket caps

What’s not to like about the idea of expanding an entitlement program that is already speeding towards collapse, mainly because too many people are entering it already?  As it turns out, plenty — and even the New York Times has noticed. It has higher premiums, none of the out-of-pocket caps that private policies have, and will attract a pool with much higher risk, driving costs of premiums and services up, according to a former Medicare trustee:

Marilyn Moon, a health economist and former public trustee of Medicare, said that for people 55 to 64, Medicare premiums could be higher than premiums charged by private health plans.

Health policy experts said that the people who chose to enroll in Medicare were likely to be heavy users of health care, with higher-than-average costs.

Moreover, Ms. Moon noted, private plans would have large numbers of healthy people under the age of 55, whose premiums could help cover costs for those 55 to 64. “Such cross-subsidies would not be available under the new Medicare option,” she said.

All of that would be a burden to a program on sound financial footing.  That certainly doesn’t describe Medicare.  It’s the worst of the entitlement nightmares, about eight times larger in unfunded future liabilities than Social Security, and it’s been a net-deficit program for years.  Thanks largely to Medicare in its current form, federal spending on it will go from 4% of GDP in 2007 (roughly 20% of that budget) to 12% of GDP by 2050.

That would be without expanding eligibility, and would be closer to 60% of the federal budget if the government took the same bite of the GDP in 2050 as it does now — which would be absolutely impossible with that kind of entitlement burden.  The federal government would have to expand its budget even without ObamaCare to contain the massive entitlement spending at the current set of liabilities.  We’re on a path towards having government take three times as much of our GDP by 2050, killing the economy by sucking out capital and putting it into the most inefficient hands possible, because no one has the political guts to effect real reform.  Instead, we’re getting the hair of the dog that bit us.

Charles Grassley offered a perfect analogy:

“If the Titanic is sinking, the last thing you want to do is to put Grandma and more of your family on the boat,” said Senator Charles E. Grassley, Republican of Iowa.

That assumes Grandma can afford to take the quick trip to the bottom of a sea of red ink, too.  The addition of the FEHBP turns out to be an expensive option:

Senate Democrats have provided few details about their latest health care proposal, but this much seems clear: Anyone who wants to buy the same health benefits as members of Congress, or to buy coverage through Medicare, should be prepared to fork over a large chunk of cash.

According to the Congressional Budget Office, a family of four earning $54,000 in 2016, when the health legislation is fully in effect, would be eligible for a subsidy of $10,100 to help defray the cost of insurance under the health legislation being debated by the Senate. By then, one of the most popular federal plans, a nationwide Blue Cross and Blue Shield policy, is projected to cost more than $20,000.

That could leave the family earning $54,000, slightly more than the current median household income, with monthly premium costs of more than $825.

And that’s with the subsidies.  The Medicare buy-in  — for which no federal subsidies are applicable — would carry almost the same cost, at $7600 per individual (it will not have family coverage), or over $630 per month.  Remember, too, that this has a diminishing network of providers, no out-of-pocket caps on expenses, and so on.

This isn’t a plan for reform.  It’s an escape hatch for Senate Democrats who got themselves stuck on the wrong direction for reform and have trapped themselves in a highly unpopular effort.  They’re rushing to the lifeboats before the Titanic sinks, and they’re trampling Grandma and everyone else to get a seat.

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