The text details the privatization policy that GOP lawmakers have supported for years, and that Mitt Romney and Paul Ryan are selling as necessary to “save” Medicare. But in an unusual twist, it addresses the specific aspect of the proposal that makes it a departure from what Americans know as “Medicare.”
“The first step is to move the two programs [Medicare and Medicaid] away from their current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model,” the draft platform reads. “While retaining the option of traditional Medicare in competition with private plans, we call for a transition to a premium-support model for Medicare, with an income-adjusted contribution toward a health plan of the enrollee’s choice. This model will include private health insurance plans that provide catastrophic protection, to ensure the continuation of doctor-patient relationships.”
The esoteric language gets to the heart of the change that ends the basic structure of Medicare. Since its inception in 1965, Medicare has been a government-run insurance program that directly pays medical bills for the elderly per their needs (i.e. “defined benefit”). Republicans want to turn it into a partially privatized system that pays seniors a fixed amount to buy their own health insurance (i.e. “defined contribution”).
“Under the defined contribution approach envisaged by the Rivlin-Ryan plan [a proposal that’s remarkably similar to Romney’s], most of the risk of future health-care cost increases would be shifted onto the shoulders of Medicare beneficiaries,” Uwe Reinhardt, a health policy expert at Princeton University, said last year. “This feature makes the proposal radical.”
The nonpartisan Congressional Budget Office has found that the plan will raise seniors’ out-of-pocket medical expenses by thousands of dollars, a fact Democrats hasten to point out. The draft Republican platform claims that the competition among private insurance plans will lead to major cost savings, though little evidence exists to support this argument.