Last month, Sen. Joe Lieberman (I., Conn.) voted against the House Republican budget authored by Rep. Paul Ryan (R., Wis.), which includes significant reforms to Medicare. After doing so, the former Democrat says, he could not in good conscience do nothing, as that would signal an endorsement of the status quo, which when it comes to Medicare, as well as the national debt, is simply unsustainable. Indeed, the program’s own trustees admit as much.
So Lieberman took to the pages of the Washington Post to offer his own plan to preserve Medicare for future generations. Sen. Tom Coburn (R., Okla.) took notice, contacted Lieberman, and offered to work on a bipartisan proposal to present to Congress. The pair unveiled their plan Tuesday at a press conference on Capitol Hill. “We can’t save Medicare as we know it,” said Lieberman. “We can only save Medicare if we change it.”
The senators’ plan would save an estimated $600 billion over ten years and extend Medicare’s solvencey by “at least 30 years” by instituting a number of cost-saving structural reforms. These include:
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“Streamlining” the program by combining the Part A and Part B deductibles.
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Raising the age of eligibility from 65 to 67 by the year 2025 (a rate of two months each year) to reflect the dramatic increase in life expectancy since Medicare was passed (from 70.2 in 1965 to 77.7 in 2006).
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Means-testing requiring wealthy individuals to cover a larger percentage of their premiums and pay higher out-of-pocket costs. “We simply do not believe that tax dollars should be used to pay premiums for those who can afford to pay on their own,” Lieberman said.
The plan would also impose a cap on seniors’ out-of-pocket costs depending on their income, which would limit the amount individuals seniors must pay for health care on an annual basis. The cap would be set at $7,500 for individuals making $85,000 or less per year (the lowest bracket), and $22,500 for those making $160,000 or more per year (the highest bracket).
The key to reining in costs, Coburn argued, was to introduce “a little bit of market force” into the health-care sector in a way that gives patients a greater awareness regarding the cost of care. “It just doesn’t work because everybody thinks somebody else is paying for their health care,” he said. “That’s not just in Medicare, that’s everywhere.”
All told, the senators said their plan would reduce Medicare’s massive 75-year unfunded liabilities by $10 trillion and significantly lessen the program’s strain on the federal budget. Neither expected the plan to very popular among their colleagues. “Nobody’s going to like this plan,” Coburn said. “We understand that.”
“We know that each part of our proposal will make some group of people unhappy and will provide easy targets for attack from those who understandably want to preserve the status quo,” added Lieberman. “But the status quo only leads to the collapse of Medicare and fiscal disaster for our country. We’re way past the point where we can save Medicare and cut the debt while keeping all of the interest groups and all of our constituents happy.”
It wasn’t long before their colleagues proved them right, at least on the Democratic side.
Senate Majority Leader Harry Reid (D., Nev.) reiterated his opposition to Lieberman’s original plan, calling it a “bad idea.” House Minority Leader Nancy Pelosi (D., Calif.) called it “unacceptable.”
“Any changes to Medicare must strengthen the Medicare system and improve the health of our seniors,” Pelosi said in a statement. “It is unfair to ask seniors to get less in benefits and wait longer to get onto Medicare — all while Republicans back tax breaks for Big Oil and corporations that ship American jobs overseas.”
Senate Minority Leader Mitch McConnell (R., Ky.) stopped short of endorsing the plan, but applauded the senators’ effort, saying it “underscores the necessity” of reforming entitlement programs. “I don’t see how we can have a credible large, or frankly even small package to address [the deficit] and leave entitlements sitting on the sidelines,” he told reporters.
Still, Coburn and Lieberman expressed hope that their plan could serve as a “bipartisan beachhead” in the ongoing debt-ceiling negotiations. Lieberman said, “At a minimum, maybe we have offered some ideas here” for President Obama and congressional leaders to consider as they work to reach a deal.
Coburn insisted that any serious deal must do something to rein in Medicare costs. “Medicare has to be fixed,” he said. “You can live in la-la land and say, no, it’s going to stay the same — it isn’t going to stay the same. Even if the Congress doesn’t do anything, it isn’t going to stay the same. We’re not going to be able to borrow enough money to afford it.”
And while there are elements of the plan he personally disagrees with, Coburn said the situation was too urgent to get hung up on partisan objections. “The option is not to do nothing, the option is how do we find a way forward that preserves Medicare in a way that we can get it through Congress that also preserves the country,” he said. “We need to shake the political shackles and start doing what’s best for the country, not what’s best for any party.”
Lieberman concurred, calling Medicare a “sick” program in dire need of reform. The longer Congress waits to act, the more painful the changes that will be required. “The sooner you take the strong medicine, the sooner you’ll get healthy again,” he said.
Go here for more details about the plan.
Why don't we just require the rich to pay for all of it?
That's worked so well for the rest of govt.
Reply to this commentLinkReport AbuseI agree, let's just let "the rich" (and I still need some clarification on the definition of "rich") just pay for everything! Besides, they (whoever "they" are...) simply have all these swimming pools of money they're doing nothing with, right? I mean the "rich" don't stay that way by investing any of it, which might create jobs and help strengthen the economy, right? They must just have rooms full of idle money, doing nothing but simply laying there, so they can waste away their time by just staring at it with no intent of putting it anywhere except for maybe stuffing it in their mattresses, right? Yep, I'll just bet that's what the "rich" do with their money!
Reply to this commentLinkReport AbuseOn another thread, a so called conservative declared that raising the capital gains tax would be a good thing because the rich were just sitting on their money. He actually felt that taxing investment at a higher level would force them to start investing that money.
Reply to this commentLinkReport AbuseIf life expectancy has gone up 7 years since the program's inception, shouldn't the age of eligibility be raised by more than 2 years?
Reply to this commentLinkReport AbuseVery good. Very nicely put. But please, for the love of God: REIN in. It's REIN. Reins are what we use on horses and oxen and things, and when we control them, we REIN THEM IN. "Reign" is what monarchs do, and one could well argue that the Powers That Be in D.C. are doing entirely too much "reigning" and not nearly enough "reining"...sigh...
Reply to this commentLinkReport Abuse“Any changes to Medicare must strengthen the Medicare system ...”
Well, ma'am, those trying against your fervent wishes to keep the program solvent are attempting to strengthen the system.
Because, to many of those outside of the Haight Ashbury district, keeping a program solvent that so many people rely on, instead of watching it go bankrupt through botox-stretched eye sockets, STRENGTHENS the program.
Do tell, Madam Grandma: How do YOU strengthen Medicare by allowing it to go broke?
Reply to this commentLinkReport AbuseHow much Medicare spending goes toward people between 65 and 67? That's how much that provision will save. Also, the increase in life expectancy has almost entirely gone to the top half of the income distribution: poor people's lifespans have increased by about 2 years.
Only about 10% of people in the US make more than $160k. 10% of seniors times 22,500 is how much that provision will save.
These changes are small-bore. If you think Medicare is fundamentally flawed, this amounts to rearranging the deck chairs on the Titanic.
These changes also do nothing to shrink the rate of cost growth, which is the root of the problem. Combined with delivery and payment reform, they would be helpful, but on their own they won't do anything to fix the problem, nor will they do anything to satisfy Medicare's harshest critics.
Reply to this commentLinkReport AbuseI can't help but think the problem here is not the government but the media. What if the headlines read, "Pelosi: 'We have a plan' to Throw Seniors Off Medicare in 2024"
I mean, that's what "We have a plan- it's called Medicare" amounts to. If media coverage weren't so biased in favor of Democrats, entitlements might not even be a problem in the 1st place.
Reply to this commentLinkReport AbuseWe have 535 elected federal representatives that caucus in the lower and upper houses of Congress. Of those 535, only THREE have the courage to present (in their own name) any kind of plan that will (only) temporarily "fix" Medicare.
Where has the courage gone? So much for either all hanging together rather than hanging separately.
Reply to this commentLinkReport AbuseThe only way this works is for moving the changes up much sooner than 2025. It has to happen in by 2015 to have any real hope of helping. And it doesn't fix it, just buys us more time. The model is still the same, it is still govt run, with mandated benefits. At least it is worth discussing, but even more than the Ryan plan, this is not enough.
Reply to this commentLinkReport Abuse@Evan, you nailed it. Tax increase as well WILL NOT fix the insolvency of these programs. We know what happens when you raise tax rates on the rich. They offshore their money, or will retire in countries with more friendly tax rates, thusly moving their ENTIRE fortune and spending and wealth creation to that country.
We cannot and SHOULD NOT pretend that raising taxes is the problem in Washington. No amount of tax increases are going to fix the course that 8 years of progressive Republicans and TWO YEARS of absolute progressive democrats have set us on. If we do not REVERSE course THIS YEAR, the country might as well just go down.
From earlier today and a MUST READ:
External Link
Our growth is at least half of what Obama projected, meaning our debt is going to be TWICE what they projected.
In terms of taxation, they would need to take 1.6+ Trillion per year from the private sector GDP to cover their "investments", the sheer loss of industry and manufacturing and service is absolutely astonishing. 1.6 Trillion is more than 10% of the current GDP... GONE...
Reply to this commentLinkReport AbuseWhat no one wants to talk about is end of life care...that is where the money goes. The poster who asked how much we spend on care between ages 65 and 67 has it right--not much. I certainly don't want the government rationing end of life care, nor the insurance companies, but someone has to make tough choices about how much we spend extending our lives by a few months with expensive drugs, weeks in an ICU, procedural interventions and the like.
The problem is only going to get worse as the population of people with dementia grows. It is much cheaper to have grandma die suddenly of a heart attack or stroke than to have her linger dementedly in a nursing home for a decade. Please don't think I am advocating euthanasia; I am simply describing the problem.
One thing we do need and have (usually) at hand is family. Families used to take care of their older members, not just financially but also emotionally, helping them make decisions and manage their lives. Now the kids flee and leave their parents to the taxpayer.
This is one part of Ryan's plan that concerns me--as people age and (many) decline cognitively, they are LESS able to make informed decisions about their medical care. We can't have a true market if the consumers are intellectually unable to make good decisions. I see this in my own parents--both college-educated and one a physician. Fortunately, I am in town with them and well-versed in the medical field, so I can serve as a sort of case worker to coordinate their care. I don't know what older people do when their kids aren't around--and I don't know what the kids do when they themselves don't know their way around the medical industry.
Reply to this commentLinkReport AbusePharmamom, I think you've hit the nail on the head.
Perhaps one thing we can do is structure things to encourage spouses and children to take on some of these tougher cases in their own homes. Just as we subsidize raising kids through the tax code, we could also subsidize caring for elders, perhaps in conjunction with routine visits from a nurse or hospice worker.
It seems to me that this kind of system would be better for the elderly, better for families and better for the Medicare budget. I know I'd much rather spend my dying days in my own home, surrounded by people I love.
Reply to this commentLinkReport AbuseGeoff, I believe the best is not to "encourage" but simply to stop subsidizing the bill. "Encouraging" is nice but will not do: as long as I spend your money you can encourage me to do otherwise but I will keep spending your money. Simple human nature.
Reply to this commentLinkReport AbuseWell, ObamaCare was supposed to include a provision that paid doctors for talking to Medicare recipients about living wills and end-of-life care. I forget what happened with that.
Reply to this commentLinkReport AbuseThese are issues that a family should discuss amongst itself long before the situation arises. I shouldn't have to pay for YOUR parents to have that discussion with their doctors. YOU should have that discussion with them.
Beyond that, the family members are often the ones refusing to let their "loved ones" die. Perhaps if we asked Johnny for his credit card to pay for the ICU bill while he worked out his issues with Dad, Johnny would arrive at "closure" a bit sooner.
Beyond that, I was referring to decisions about care made before "pulling the plug" or extraordinary measures come into play. If I were terminally ill and knew that my kids had to pay for treatment that would prolong my life for only a few months, I would choose to forgo that treatment. Simple as that. But since YOUR kids are paying for it (and other total strangers), why should I give a rap?
Medical care is only going to increase in cost as our technologies get more advanced. Cutting-edge therapies are expensive; transplants are expensive...Not everyone can have everything--we simply cannot afford it. My point is that I would rather have my family and myself make those decisions than the government or an insurance company.
Does that mean the system will be "fair" and everyone will have access to all the best stuff? No. But then, if the government is in charge, no one will have access to any of it. Having access to organ transplants and multiple imaging studies and expensive medications isn't a right. Period. We used to be accustomed to the idea that we all die. Perhaps if we didn't shunt our elderly off to nursing homes to die away from our sight, we wouldn't hold on to the illusion that we are immortal.
Reply to this commentLinkReport AbuseEnd of life care accounts for up to 25% of medicare expenditures which occurs in the last year of life. This is where the discussion should start if we are serious about the future of medicare.
Reply to this commentLinkReport AbusePV MD
My point ezzackery, PV. But not just the last year of life...think of the multipe MRIs done on nursing home patients who have repeated falls. Every fall means a trip to the ER for an MRI to rule out a stroke. I have docs who have seen patients with four or five MRIs in a year. All CYA scans because no one wants to be the guy who didn't think grandma didn't need yet another scan.
I trust most physicians to make common-sense decisions about treatment for the elderly...sadly, they are unable to exercise their judgement. And since the patient and the family aren't footing the bill, they are all too ready to insist on "everything being done" and all too ready to insist on perfection from the physicians.
I keep waiting for the health policy wonks and the politicians to talk about this, but no one has the spinal fortitude to bring it up. And that's because no one has the guts to say that we don't deserve to have everything done to prolong our lives for as long as possible unless we have the means to pay for it.
This whole issue drives me berserk. I saw it with my husband--his demented mother got her Lipitor right up to the day she died. A heart attack would have been a merciful death compared to her ultimate end. She didn't recognize a living soul for the last three years of her life, but my husband was insistent on "doing everything." He just couldn't accommodate the idea of her death.
Perhaps the ultimate tragedy of all this is the loss of the grace that accepts death.
Reply to this commentLinkReport AbuseActually PaulVad - 80% of an individuals health care expenses are incurred within the last six months of their lives. Where did I get this? From working in the health insurance industry for the past 30 years. While it certainly does not happen to each and every one, actuarily, that is how it plays out over millions of people, at least in this Country.
Reply to this commentLinkReport AbuseI respect both Coburn and Lieberman, but I am afraid this just won't cut it. Income-based caps will only spawn the kind of asset-relocation strategies that have turned Medicaid into a custodial care funding mechanism for people who could well afford to pay for their own (or that of their parents). Making the deductible mandatory is clever, but why set it so low? Restructure Medicare to cover the middle ground (say between $1500 and $15000 per year), and let the insurance industry set the premiums for coverage beyond that, with individuals self-insuring through deductibles and copays.
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