Union-backed groups oppose GOP Medicare voucher plan

Kaiser Health NewsOctober 28, 2010 

WASHINGTON — Cat food wasn't on the menu at a recent book launch party for "Young Guns: A New Generation of Conservative Leaders." But that didn't stop representatives of the labor-backed Alliance for Retired Americans from handing out cans of the stuff to arriving partygoers at the fashionable Johnny's Half Shell, a few blocks from the U.S. Capitol. The less-than-subtle protest targeted Republican proposals in the book to privatize Social Security and turn Medicare into a voucher program.

"We'll all be eating cat food when we're old and gray," Frank Clemente, the campaign manager of the advocacy group Strengthen Social Security, screamed to cheering protesters who hoisted cat food and chanted "young gun chow" and "Ryan retirement meal." Strengthen Social Security, which also is union-backed, is affiliated with the Alliance for Retired Americans.

The attacks were aimed at Rep. Paul Ryan of Wisconsin, who wrote the book with fellow House of Representatives Republicans Eric Cantor of Virginia and Kevin McCarthy of California. All are favored to win re-election next week, according to polls, and if the GOP takes control of the House, they'd be in position to advance their ideas.

Ryan is the top Republican on the House Budget Committee and a senior member of the Ways and Means Committee, which has jurisdiction over the two entitlement programs. Cantor also serves on the Ways and Means Committee, and he's already the GOP's second in command in the House, as minority whip, or vote counter. McCarthy is Cantor's chief deputy whip.

The Alliance for Retired Americans has held similar rallies across the country over the past couple of months, trying to bring Ryan's ideas to the attention of seniors before they vote in November.

Polls show that seniors on the whole are leaning Republican this election season, and that they trust Republicans more than Democrats when it comes to Medicare. At the same time, a Pew Research/National Journal poll conducted in September found that 69 percent of people older than 65 — Democrats and Republicans — oppose replacing Medicare with vouchers.

The book's Medicare ideas come from Ryan's Roadmap for America's Future legislation in the past two sessions of Congress. While it's received only limited attention, it could gain ground if Republicans win control of the House next week.

Ryan said that Medicare was on shaky financial ground; Medicare's trustees called in August for changes to address short-term liabilities.

"The sooner we get ahead of this solvency issue, the more likely we can guarantee the existing system," Ryan Said. "Gradual, phased-in reforms is the most compassionate way to move forward."

Under his proposal:

  • Current Medicare beneficiaries and those who are nearing retirement (55 and older) would get Medicare as it exists today. For everyone else, eligibility would begin at 69 and a half, and there would be a "standard Medicare payment" for the purchase of private health coverage.
  • At the beginning, Medicare vouchers would cover $11,000 of the cost of a health plan, which the proposal lists as the average amount that Medicare currently spends on a beneficiary. The total would increase with inflation, based on a combination of the consumer price index and its medical care component. If the payment exceeds the cost of a plan, the beneficiary could invest the leftover money in a medical savings account to pay for other needs or buy long-term care insurance.
  • Government payments would vary depending on an individual's income, health status and, initially, region. Individuals with annual incomes of less than $80,000 would receive the full amount, those who make $80,000 to $200,000 would get half of it and those who earn more than $200,000 would receive 30 percent. The government also would fund medical savings accounts for low-income beneficiaries.

The government also would lower Medicare spending automatically if the program's trustees determined that the percentage of funding from general revenues topped 45 percent. Currently, Medicare is funded through a combination of general revenues, payroll taxes and beneficiary premiums.

This kind of mechanism has been tried before, although it wasn't automatic, and Congress ignored it. The 2003 Medicare modernization act, which created Medicare's prescription drug benefit, also instituted a trigger. When spending from general revenues exceeded 45 percent of total Medicare spending, the president was supposed to submit "corrective" legislation to bring it back under that threshold. Congress should have been forced to vote on corrective legislation in 2008, but it didn't do it.

"I wrote this plan two and a half years ago, and I will rewrite it this year to show a way forward to make these programs solvent," Ryan said.

A handful of union groups, organized under the alliance umbrella, is leading a vocal opposition. The alliance represents more than 20 labor organizations including the AFL-CIO, the American Federation of Teachers and the Service Employees International Union.

Karen Gilgoff, the assistant director of AFSCME Retirees, which represents retirees from state, county and municipal governments, said she was particularly concerned that many seniors, especially independents, were leaning Republican this campaign season.

She said that seniors would be in for a surprise when they saw what key Republicans had in store: "If they win the election, seniors will regret their votes, because Republicans are trying to undermine these programs."

(Marilyn Werber Serafini is the Robin Toner Distinguished Fellow at Kaiser Health News, an editorially independent news service of the Kaiser Family Foundation, which is a nonpartisan health care policy research organization that isn't affiliated with Kaiser Permanente.)

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