What we’re not being told about Paul Ryan’s Medicare plan

From The Guardian UK: http://www.guardian.co.uk/commentisfree/cifamerica/2011/apr/26/healthcare-congress

The mainstream media has failed to report that the Ryan plan is a privatisation programme that will hand $30tn to insurers

Dean Baker
guardian.co.uk, Tuesday 26 April 2011

Who shot Major Strasser? Humphrey Bogart and Ingrid Bergman in Casablanca (1942). Photograph: Bettmann/Corbis

The film Casablanca features one of greatest moments in movie history. With Humphrey Bogart standing with a smoking pistol over the body of the dead Gestapo major, Claude Rains, in the role of the French colonel, tells his troops: “the major has been shot, round up the usual suspects.”

Unfortunately, the Washington policy gang is busy following Claude Rains’ instructions. The nation is drowning in endless accounts of how the huge deficit will sink the economy and the country. These accounts invariably feature stories of a Congress addicted to spending and a nation that wants government benefits that it doesn’t want to pay for.

This story has nothing to do with reality, as all budget analysts know. The explosion of the budget deficit in the last three years is a response to the plunge in private sector demand following the collapse of the housing bubble. If the budget deficit were smaller, we would simply have less demand and fewer jobs.

Paul Ryan did his best to lay out the long-term story as clearly as possible with his plan to privatise Medicare. The analysis by the non-partisan Congressional Budget Office (CBO) shows that Ryan’s plan would hugely increase the cost of healthcare to seniors. Under the Ryan plan, a Medicare-equivalent policy is projected to cost almost half of a median 65-year-old retiree’s income by 2030. It would soon exceed the income of most retirees, as healthcare costs outpace income growth.

However most of the additional burden projected for retirees is not the result of cost-shifting from the government. The vast majority of the additional burden that the CBO projected for retirees comes from the higher cost of private insurance compared with the government-run Medicare system. The additional cost as a result of adopting Ryan’s privatised system is more than $30tn over Medicare’s 75-year planning horizon.

To put this in perspective, CBO’s projected increase in the cost of buying Medicare-equivalent insurance policies through the private sector is roughly six times the size of the projected social security shortfall. The projected shortfall in social security has sent thousands of politicians screaming about devastating burden on our children. How, then, should we describe something that is six times as large as this “devastating burden”, a sum that is just under $100,000 for every man, woman and child in the country?

Continue reading at: http://www.guardian.co.uk/commentisfree/cifamerica/2011/apr/26/healthcare-congress

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