No Changes If You’re Over 55? Think Again

April 27, 2011
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Republicans are getting attacked at their spring break Town Hall meetings over their plans to privatize Medicare and turn it into a voucher program. But they seem to be getting traction with one response, which reflects the political jujitsu contained in Rep. Paul Ryan’s plan. Here’s what Rep. Lou Barletta, a Republican from Pennsylvania, told the New York Times:

I am not sensing the general public is angered over Medicare reform. When I explain that people over 55 are not affected there is almost a sigh of relief.

From the start, it was obvious why Ryan included the delay in his privatization scheme. It allows Republicans, who’ve always backed privatization of Medicare, to tell current seniors — their political base — that this will not affect them. Of course, that also means that the proposed change will do nothing to solve the current decade’s budget deficit, the ostensible reason for the change. But that’s not really the goal, is it?

But let’s take a closer look at what will actually happen after 2023, and think through what it means for the generation between 45 and 65, most of whom will still be alive by 2033 when Ryan’s privatization scheme will be fully in effect. Every new senior entering Medicare after 2023 will receive a voucher to buy insurance. According to the Congressional Budget Office, that will pay for less and less of their coverage. By the time 2033 rolls around, their vouchers will cover about one-third of the cost of care.

But what will the overall Medicare-eligible population look like in 2033, when the entire 77-million strong baby boom generation will be in its golden years? According to the CMS actuary’s office, there will be 85.4 million Medicare-eligible seniors that year, up from 48.6 million today. Their projection for 2023  is about 69 million. That means roughly 16 million newly retired, active, more politically engaged seniors will be receiving sharply lower benefits and making sharply higher co-pays (call it higher taxes) to pay for health care, while about 53 million will be on the old plan that pays about 80 percent of costs. Every year after 2033, the ranks of seniors in the costly plan will grow, while there will be a declining number of seniors under the old, more financially attractive plan. Moreover, those in the old plan will be the most expensive people to take care of because they are the oldest in the cohort, thus consuming the vast majority of Medicare’s funds.

So what we will have is two groups of seniors: one younger, healthier, more politically active and making significantly higher payments for health care insurance out of pocket; and the other older, sicker, poorer and being coddled with the financially “bankrupt” older plan. This is precisely the situation that people in line for state and local government pensions face. Taxpaying private sector workers, whose employers took away their pensions years ago, resent paying higher taxes for pension benefits earned by their neighbors who went to work for government and never had their pensions taken away.

Can there be any doubt that there will be opportunistic politicians in that far away year of 2033 who will attack the “greedy geezers” in the old plan? Won’t older seniors wind up being easy scapegoats for the rising anger of those stuck in the new plan who are paying higher bills?

The politics of resentment has a long history in America. One is reminded of the retort by Guilded Age tycoon Jay Gould, who in 1896 faced a strike among his railway workers at a time of high unemployment. “I can can hire half the working class to kill the other half,” he shrugged.

I’m over 55. In theory, I don’t have to worry about Paul Ryan’s plan. But here’s my message to my cohort: We can hang together, or we can hang separately. You may think you’re safe from the effects of privatization on future seniors, but if I were you, I’d keep a wary eye out for the other half of the working class.

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3 Responses to No Changes If You’re Over 55? Think Again

  1. Lanette Fox on April 27, 2011 at 10:57 pm

    You are so, so, so RIGHT! Except, we won’t have to wait all that long to be thrown to the wolves if we are over 55 right now. As fewer and fewer people are enrolled in the old Medicare, the pool will shrink, and doctors will refuse to treat us at all. The only reason they accept Medicare patients right now is because almost everyone over 65 is on Medicare, so volumn makes up for the lower profits they make on us. This law kills Medicare for everyone, including anyone over 55. The Republican tea baggers intend to kill us off. And the answer is not so hard to figure out. Levie FICA taxes on the last dollar earned, same as it’s levied on the first dollar earned right now. If somebody earns $200 a year, they have to pay the tax. What’s wrong with people who make $200 billion a year paying into it, too? They’re not paying any other taxes. They pay a lower rate than I do, on Social Security and a teacher’s pension.

  2. Douglas O. on May 2, 2011 at 4:57 am

    A big thanks to Digby for pointing me to your site Gooz.
    This is precisely what the Republi-Cons do. They instill resentment between what becomes two classes of people, those with a good health care plan or pension and those who are paying out the ass for insurance in name only. The same thing has happened at the auto manufacturers with new hires stuck in a low paying job with few benefits while those with years of seniority still have their negotiated plans with much better benefits and pay.

    We cannot let this happen. People must think of someone besides themselves and stand up for their children’s future and their children’s children’s future.Long after we are gone our children and grandchildren will also get old and need medical care far beyond any one persons ability to pay and we have all seen the fact laid bare,corporations have no conscience. If Ryan has his way America will be a two class system with a small minority wealthy and connected enough to get what they need while the rest of us serve only to enrich these corporations until they decide it is no longer profitable for them.Then you die.

  3. James L. Godwin on May 2, 2011 at 9:44 am

    Many current seniors will, in fact, be affected. West and Barletta were likely unaware that Ryan had made essentially the same Medicare Advantage(MA) cutbacks that the Democrats did in the Affordable Care Act (ACA). Ryan repeals only $10 billion of the $200 billion in ACA overpayment cutbacks. It’s kind of hush-hush, and many commentators haven’t picked up on it. Each of the 11 million seniors now in Medicare Advantage will have to pay $3,714 extra to purchase in 2017 the same level of health services they have now. Further, half of them will be forced out of their MA programs because of rising premiums or whatever.
    see Heritage Foundation Backgrounder #2464 (9/14/2010)
    see Wall Street Journal blog “Ryan Budget Keeps Medicare Cuts GOP Once Criticized”
    http://blogs.wsj.com/washwire/2011/04/06/ryan-budget-keeps-medicare-cuts-gop-once-criticized/

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