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Obama vs Romney on Medicare, Research Paper Example

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Research Paper

At the beginning of the presidential race nearly one year ago, Medicare, the public insurance program for the elderly, was not expected to play a substantive role in policy debates.  This is not only due to the fact that many do not understand the policy minutiae of the program, but also a function of electoral politics: Any candidate proposing (radical) change to the Medicare program would likely lose the votes of existing and future beneficiaries, and ultimately, the election.  With Mitt Romney’s decision to tap Paul Ryan as a running mate, however, the political dynamics surrounding the issue changed). Ryan’s controversial proposal to use “premium support” for Medicare beneficiaries initiated a raucous debate over the future of the program.

There is a basic difference in values that comes into play when comparing the two parties’ approaches to health care: Republicans advocate for the individualistic model of American politics and see an opportunity for business to provide services for profit through the private sector while the Democrats seek a community-based approach and some hope to socialize medicine and ultimately introduce a Medicare for all, single-pay plan as a public option.  Those features never had a chance in the debate over reform.  Morally, the high ground should go to the democrats as they seem to view health care as a human right rather than a product to be purchased on the open market.  There has been some movement toward changing the manner in which health care providers receive compensation by the new law.

Regardless of ideological position, both candidates (and political parties) must face an inconvenient truth: Medicare is not on fiscally sustainable ground.  The CMS Office of the Comptroller’s 2012 report stated that without dramatic changes in how the program is financed, it would be insolvent by the year 2024 (Hensley, 2012).  While in this case of government accounting “insolvent” is not synonymous with “bankrupt”, the report focused politicians’ attention on Medicare’s future fiscal troubles.

President Obama’s position on Medicare draws on the historical version of Medicare as a social insurance program for seniors with the Affordable Care Act (ACA) serving as the main reform template. While President Obama doesn’t necessarily follow in either the political or ideological tradition of Lyndon B. Johnson, he continues the Democratic Party’s focus on programs such as Medicare and Social Security as the main fixtures of the state’s safety net for the elderly (Democratic Party Platform, 2012).  Indeed, although Obama’s policies might not back up that statement, rhetorically he has continued to lend support to Medicare as the of the nation’s health care system.

Due to the sweeping nature of the ACA legislation, Obama’s future plans for the Medicare program are embedded in the legislation. The first and perhaps most contentious point was Obama’s decision to “cut” $716 billion from the Medicare program (Affordable Care Act, 2010). This “cut” is achieved in two ways: 1) CMS has undertaken a more robust effort to detect and prosecute fraud in Medicare billing; 2) CMS will also give lower payments to some hospitals and Medicare Advantage programs (Kessler, 2012).  Democrats expectedly view this “cut” as one that makes the Medicare program stronger: efforts to remove fraud from the system are essentially bringing in money that is being spent illegally.  The other portions of “cuts” directly affect hospitals participating in the Medicare program and beneficiary plans. According to a Washington Post analysis, 34.8% of the Medicare cuts are directly tied to hospital reimbursement rates: That is, hospitals that give services to Medicare beneficiaries will receive lower reimbursement rates.  The analysis also states that 30.2 percent of the cuts will affect Medicare Advantage program- this portion will simply be cut from the support that government gives to private Medicare Advantage premiums (Kessler, 2012).

The “pay for performance” element is the second main reform introduced in the ACA.  The “fee-for-service” financing schema is one of the main problems in how Medicare delivers care.  That is, doctors (and affiliated personnel) are paid based on the services they deliver to a patient rather than how that patient ultimately does.  Health economists posit that this payment system incentivizes doctors to perform more services than are necessary in order to inflate the bill.  In order to deal with this vexing phenomenon, President Obama (and Congress) inserted several initiatives that will pay providers for the results of their care rather than merely the volume delivered.

Accountable Care Organizations, or ACOS in medical parlance, are the main pillar of this strategy.  An ACO is simply a hybrid of different medical organizations composed of providers (doctors’ groups), hospitals, and insurance companies.  Under the current pilot, ACOs are assigned a group of patients for which they are responsible for the care (Manos, 2010).  By “responsible” it is meant that CMS will assess the payments to the ACOs based on their performance among a number of quality-related outcome measures.  CMS hopes that by changing the focus of payments from services to outcomes, ACOs will have more incentives to provide less and more efficient care rather than simply looking to code more procedures.

A major policy change occurred when the ACA was passed and the issue of a national lack of health care for millions of people took on a new perspective in the debate leading to the law’s passage. From a policy advocacy standpoint, the issue of health care costs was presented as a problem with a lack of available health insurance.  In advocating for national health care, the Democrats approached the subject from not only a moral point of view but introduced a more practical perspective that tied rising health care costs to a sluggish economy and the national debt.  The Democrats sought to approach the need for health care reform from several political platforms including a moral impact, a fiscal responsibility and an intrinsic belief that American businesses could be more competitive if government bore the burden of providing health care to individuals.  The Democrats constructed a target population of some 47 million uninsured individuals and looked to provide not only much-needed health care but to shore up their political constituency as well.

The Romney/Ryan approach to Medicare features a radically different approach to medical markets than the Democrats. Before analysis is presented on Paul Ryan’s Medicare philosophy and plan specifics a quick word : One could (persuasively) argue that Mitt Romney has his own Medicare plan, promulgated before the announcement of Ryan as his running partner; however, in order to explore the most differences in the two candidates’ platform on the issue, this section will take Ryan’s plan for Medicare, a position that is defensible since Romney selected Ryan, even with all of the ideological baggage related to his plan.

While the Democrats starting point for analyzing Medicare is the putative social contract made between different generations, the Republicans, and particularly Romney/Ryan/ start from the point of fiscal responsibility (Ryan, 2013).  As mentioned earlier, due to the retirement of the baby boomers and cost inflation related to the delivery of health care, Medicare is composing an increasing percentage of the federal budget. Medicare’s untenable future plays into a Republican (perhaps tea party inspired) governing philosophy that the best way to fulfill obligations related to Medicare is to put the entitlement program on steady fiscal footing.  This, in contrast to the Democrat position, means that while Republicans may support some of the reforms in the ACA (including ACOs); they want to fundamentally reform the program in order to ensure its viability over the long-term.

Paul Ryan’s “premium support” plan is the main pillar of the effort of the Republicans to reform Medicare.  Currently, a majority of beneficiaries receive Medicare benefits from the government; that is, when beneficiaries go to the doctor or hospital, their bills are paid by CMS via a number of agencies located throughout the country based on the relevant insurance involved in the transaction. There are also roughly 13 million beneficiaries (2013 CMS estimate) that receive benefits privately via “Medicare Advantage programs” – Medicare Advantage plans are plans that offer similar benefits to Medicare but are administered by private insurance companies (Biles et al., 2012) . Under Ryan’s plan, Medicare benefits would still exist, but they would all be administered by private insurance plans to beneficiaries, taking the federal government out of the process (Song et al., 2012).

Government funded programs impact the overall quality of medical delivery systems in the United States.  Cuts in these programs trickle through the system and eventually cause critical health programs to be reduced or eliminated, care provider reimbursement rates to become frozen, and program eligibility criteria to be changed to keep more people from receiving benefits.  Funding cuts at the federal level impact state Medicaid programs and federal beneficiaries of Medicare coverage.  By reducing provider payments, these programs cut services as an end result.  This reality should always be considered when tempering moral and fiscal decisions that impact each other.

Ryan’s plan is also motivated by the desire to provide an opportunity for the private sector to respond to the challenges of health care.  Their approach is primarily fiscal and an underlying belief in the political platform that supports the engine of capitalism.  In their view, capitalism can supply any and all health care needs better and cheaper – and as an ancillary benefit people make money in the process.  They also advocate for personal responsibility in health care decisions, including the right to pick and choose among the varying and dizzying features in private plans that are in competition for beneficiaries.  The moral issue of an industrialized nation without universal health care doesn’t seem to resonate in their political hierarchy. The solidarity principle advocated by Democrats is at odds with how Republicans perceive the responsibility of government.  Democrats reasoned that society must ultimately pay for health care in some fashion and the current manner in which it is delivered is a hodge-podge of inefficiency.

The success of Ryan’s plan depends on the injection of competition into the Medicare market: That is, Ryan posits that private plans via competition will be able to give similar benefits at lower costs making the program fiscally viable over the long-term.  Opponents of the plan  state that  that there is little change that giving individuals money to purchase a voucher will result in the same standard of care currently received by Medicare beneficiaries; they see it as a “veiled” cost-shifting plan that will simply make seniors pay more out-of-pocket than current beneficiaries.  That is, the Medicare budget will be reduced on the backs of beneficiaries rather than through genuine improvements in the system via private competition.  In the end, there is not enough evidence to support solid conclusions from either position, but it is clear that the plan has attracted substantial attention and will likely be a key point in how many individuals vote in the 2012 presidential election.

There is a shady connotation to Ryan’s proposals in that changes to Medicare would not impact anyone older than 55 years, an obviously politically motivated caveat that Republicans obviously believe would resonate a little better with senior voters.  Ultimately, some Americans will have to accept the vouchers in exchange for the defined benefit plan that Medicare now offers, putting seniors and other people with chronic health problems at the mercy of the private sector.  That hasn’t fared so well in the past as there have been many cases of abuses through denials of coverage for “pre-existing” conditions or dropping coverage when a beneficiary needs it the most.  These are the problems that the ACA has sought to curb for the general public benefit but many of the provisions of the law have yet to be fully implemented.

There will have to be changes in how Medicare is funded for the future and that will mean higher costs for some people and perhaps inferior coverage for others.  The forces driving this decision involve moral, fiscal and political beliefs that are deeply entrenched in both candidates and in both parties. The tradeoffs society makes today between costs and benefits and how each are provided will affect the health and welfare of the elderly and infirmed for generations to come.

References

2010 Affordable Care Act Text.  Accessed at: http://housedocs.house.gov/energycommerce/ppacacon.pdf

Biles, B., Arnold, G., Guterman, S. (2011).  Medicare Advantage in the era of health reform:    progress in leveling the playing field.  Commonwealth Fund.

Democratic Party Platform (2012). Accessed at:  http://www.p2012.org/issues/platformentitle.html.

Hensley, S.  (2011, May 13). Bad economy means M will run out of cash sooner. NPR News.             Accessed at: http://www.npr.org/blogs/health/2011/05/14/136278263/bad-economy-means-medicare-will-run-out-of-cash-sooner

Kessler, G.  (2012, October 3).  Fact Check: $700bn Medicare cut.  Washington Post.  Accessed at: http://www.washingtonpost.com/blogs/election-2012/wp/2012/10/03/fact-check-the-      700b-medicare-cut/

Manos, D. (2010, November 16).  CMS ramps up ACOs, seeks physician input. Healthcare Finance. Available at: http://www.healthcarefinancenews.com/news/cms-ramps-acos- seeks-physician-input

Paul Ryan’s Budget Plan (2013 Version). Accessed at: http://budget.house.gov/uploadedfiles/pathtoprosperity2013.pdf

Song, Z., Cutler, D, Chernew, M.E. (2012). Journal of the American Medical Association. 308(5), 459-460.

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