Read all about @JebBush‘s new entitlement plan that saves $2.7T over the next 20 years: https://t.co/bRWAuricap pic.twitter.com/h0I7SsXvtH
— Loren Adler (@LorenAdler) October 28, 2015
Loren Adler has a deficit reduction fetish that is a bit creepy as he and his group prioritizes no debt without looking at either value of what is being bought with debt or larger macro-economic reasons for changes in the debt to GDP ratio. However they can do basic budget math and summarize policies well.
They have summarized the major planks of the !Jeb! Bush Medicare policy.
Let’s look at the major planks for distributional purposes:
- Premium Support — This only saves the federal government money by decreasing the growth rate of Medicare expenditures. The plan would be to tie the premium support to some combination of traditional Medicare and Medicare Advantage plans and then also to tie that to a growth rate that is the general economy plus a small kicker. The Ryan plans tied the premium support growth rate to nominal economic growth plus one percent. Health care costs have been rising at a much faster rate than that for my entire life. Distributionally this kicks older seniors in the ass if the premium support values are not age adjusted. If they are age adjusted, healthier seniors are better off than sick seniors but they are all worse off then under current policy as they will be either choosing lower actuarial value coverage, or narrower networks.
- Means testing of Medicare premiums — this is an expansion of current policy on Medicare Part B premiums. More people will be paying higher Medicare premiums, so this would be touching upper middle class seniors.
- Modify CMS management and fee schedule payments for interaction effects — I would want to read more, but these could be distributionally neutral. Dropping fees slightly hurts people with complex medical conditions as slightly fewer providers will be available for complex appointments, but this is probably minor.
- Allow more seniors to have tax free HSAs — This benefits upper income retirees as they are the ones with the taxable cash that can be sheltered/hidden in HSAs. Someone making $21,000 per year won’t be able to sock away $2,500 in an HSA while it is fairly easy for someone who is pulling in $75,000 or more.
So the three major distributional changes are a severe kick in the nuts to lower income seniors (premium support), and then a rough wash for upper income seniors (-Means testing + HSA).
jl
Companies get more money for less care. Nixon thought it was a great idea.
Thanks for the analysis.
BGinCHI
I’m suspicious of any plan that “saves” money in medicare expenditures that isn’t a straight lowering of healthcare costs themselves.
“Saving” on healthcare is like “saving” on a new car by not buying brakes.
Davis X. Machina
@jl: We could make a deal where we give them the same money for no care at all. Think of the savings.
BGinCHI
@Davis X. Machina: GOP: It will feel so good to save the oligarchs money that your symptoms will disappear.
Eric U.
my employer wants to push us to health savings plans. They are simply a stupid idea unless you are so rich you don’t need insurance. In fact, even then the tax avoidance might not be worth it.
Omnes Omnibus
@BGinCHI: I am suspicious of any Republican plan.
Doctor Science
The glaring question is about that $1.5TRILLION savings from “Social Security Plan”. WTF?
BGinCHI
@Omnes Omnibus: I am suspicious of any Republican.
Benw
Jeb’s Medicare plan will keep us safe!
BGinCHI
@Doctor Science: Look Doctor Fucking Science, Jeb is trying as hard as he can to please his mother and he only has a couple hundred million in his golden coffers so will you please cut this American bi-lingual patriot some slack?
Mike in NC
JEB! casually said we needed to ‘phase out’ Medicare but didn’t elaborate any further at the time.
Clearly he’s familiar with Cleek’s Law.
Frankensteinbeck
Nobody gives a damn, Jeb:(, except the people you go to garden parties with, and they don’t have many votes. Your plan could create universal coverage and cost one dollar per person, or replace Medicare with disemboweling cats on an altar to Mammon. Nobody would care. The GOP primary is no long about policies, and certainly not about numbers.
BGinCHI
@Frankensteinbeck: It is about the size of green rooms.
Next question.
srv
So Mr. Mayhew, you’re a smart guy, so a serious question.
Once Trump is elected, Congress will be in a position to rework and fix Obamacare. It of course will be rebranded TrumpCare.
Presuming reasonable Congressional cooperation, if you had a magic wand, what would TrumpCare look like?
Omnes Omnibus
@BGinCHI: With good reason.
Frankensteinbeck
@BGinCHI:
You’re probably right. Said garden party people are the media (he would never be so tacky as to invite them to the yacht parties), so this is just about feeling good with the social circle he wants to suck up to him.
NonyNony
@srv:
Single payer. Trump has already spoken out in favor of it so he might as well implement it.
BGinCHI
@Frankensteinbeck: If these fuckers are talking about policy and numbers (which is rare), they are talking to the money people. If they are talking about dirty immigrants, abortion, kicking the poor, etc. (which is common) then they are talking to their base.
greennotGreen
HSAs are great and all, but saving $2500/year is nothing unless you don’t have any year-to-year health expenses so you can actually save for that big one. Even then, let’s say I had saved $2500 a year for the 20 years I could afford of my 29 year work history with my employer that actually offered benefits. That’s $40000. With interest that would be…I don’t know, a lot more, maybe $80000? $100,000? The surgery I had the day after I was diagnosed was $114,000. Luckily, I had really good insurance, so we only paid a tiny fraction. But then there were nine days in the hospital, multiple trips to the emergency room because of complications, and, of course, chemo. Considering what good my HSA account would have done me, I think I would have rather spent my money on beer.
More concisely, HSAs are fine for small stuff, but not so helpful when the big ones hit.
Amir Khalid
@srv:
It will be more or less like Obamacare, but YOOOOGE and classy.
srv
@NonyNony: I said reasonable, not Berniebro insane.
Frankensteinbeck
@BGinCHI:
I don’t think that’s true. I don’t think the money people much care about policy and numbers, either. How much Medicare is cut doesn’t affect the money people in the slightest. Only a very few policies affect them, and they’ve demonstrated they’re not picky about specifics. Just say ‘cut taxes, less regulation,’ and make a joke about how lazy and selfish poor people are.
No, it’s the pundits who want to feel like wonks by looking at big numbers with no explanation, while also basking in the warm glow of knowing their lessers will be better people when they learn to live without ‘entitlements.’
Richard Mayhew
Honestly that is an unanswerable question as I don’t know what that Congress would look like and I have no fucking idea what persona Trump would be.
If he comes in as a standard issue Republican who actually faces policy constraints, I could see something like the following:
*Much lower subsidy levels for Exchanges,
*Lower Acturial value coverage and fewer essential health benefits
*Tighter Medicaid eligibility
*More tax advantages to HSAs
*Fewer industry regulations (probably re-allow underwriting but allow continuous coverage exclusion)
*Eliminate employer mandate
*Convert individual mandate into something Yuuge and CLassssssyyyy— or go to long term contracts with no open enrollment.
DemJayhawks
@greennotGreen: Go check HSA interest rates. They don’t even come close to matching inflation.
Hoodie
Definitely underpants gnomes stuff. I wonder how these geniuses think this will play with the core of their supporters, including the upper middle class ones who generally will not like the means testing and HSAs. Think how much we could save if we just ground them up and sold them for dog food.
NonyNony
@srv: Hey it’s Trump’s plan, not my fault your hero is in favor of single payer.
goblue72
@srv: That’s funny. A lunatic with the IQ of a boiled turnip accusing others of being insane.
BGinCHI
@Frankensteinbeck: You don’t think the banksters and the Pete Peterson types care about that stuff? Seems to me they want government to give them a particular kind of playing field so that they can win every game. And that means, as you say, tax cuts and lack of regulation, but also less money spent on the social safety net, which is what Jeb is proposing here.
He’s letting them know he’s their man in Havana.
goblue72
@Richard Mayhew: So basically, shittier for almost anyone not rich than the current ACA status quo.
Eric U.
@BGinCHI: are Bush’s people actually smart enough that they haven’t mentioned the green room kerfuffle? I didn’t see anything about his accommodations. I imagine he got a decent room.
kped
@Doctor Science: Wouldn’t be a proper Republican plan without a giant magic asterisk! “Here’s how I’d save money on this…also, uh….1.5Trillion in Social Security? Sure, why not!”
goblue72
@DemJayhawks: No kidding. HSAs are the answer to our nation’s healthcare coverage challenges in the same way that 401k’s are a solution to our retirement/pension challenges – only a good answer is you are already rich.
401k’s were developed to provide a tax-sheltered employer-benefit to highly compensated executives and senior management. That they’ve morphed into the default answer for “pension replacement” is only a testament to the powers of the vampire squid and the professional shyster community known as financial planners.
HSA’s likewise are great tax-sheltered employer-benefits if you are already a highly-compensated employee with gold-plated health insurance coverage. For everyone else, its a joke.
goblue72
@BGinCHI: They absolutely positively want domestic discretionary spending (i.e. spending for the poors and middles) cut as well as cuts to entitlement programs. It frees up room in the Federal budget for future tax cuts for the rich and/or for military spending that goes to companies they own.
People are kidding themselves if they don’t think the rich aren’t trying to maximize the degree to which the Federal govt acts as an upward transfer of wealth mechanism from the working and middle classes to the rich.
Greg
Health care reform is a difficult task that requires actual knowledge of how health care and insurance work and also requires that the people devising the reform be practical, intelligent people who can weigh the pros and cons and come up with a proposal that does the greatest good for the greatest number of our citizens. In other words, it is a task that is completely beyond the abilities of any of the current Republican candidates.
Germy Shoemangler
Call Of The Freaks
https://www.youtube.com/watch?v=EHxu9Ifj58U
The perfect soundtrack to the GOP debates
benw
@Greg: not only beyond their abilities, but “a proposal that does the greatest good for the greatest number of our citizens” is beyond their comprehension.
Hoodie
@BGinCHI: I thought they already knew that, which is why he hoovered up over 100 mil after he announced. Is this some sign that he’s worried about them deserting him because he’s covered with the stench of loser? If so, this is exactly the kind of stepping on your own dick that he seems to specialize in. Trump can torpedo him amidships on this. Could happen tonight, if he’s not preoccupied with questioning Carson’s choice of a sabbath.
Richard Mayhew
@goblue72: Yep
Eric U.
I might work for another 15 years, so my HSA would have 30k in it. Unfortunately, a worst-case ER visit will cost more than that. Good plan, JEB!
WereBear
I had a snarky comment about HSAs but it vanished. Twice. Now that no one can see it, I can say it was an YOOOOGEly entertaining one and it’s too bad.
(Afraid to post it a third time lest another Republican Presidential candidate appear.)
pamelabrown53
Thank you, Richard, for taking the time to provide an analyisis in a timely manner.
You rock!
Pie Happens (opiejeanne)
What does Baud have to say about all of this?
Fair Economist
Didn’t Congress, just this year, cancel a cap on Medicare expenditure growth from the 90’s because it didn’t work?
Pie Happens (opiejeanne)
Yes Richard, what Pamela said: thank you for doing this for us.
Hoodie
A propos, the video of Kasich’s recent rant is interesting, because it seems to be directed in part at Jeb Bush’s medicare “phase out” along with the other craziness in the GOP field. Wonder if it comes up tonight.
Richard Mayhew
@Fair Economist: The “problem” with the Sustainable Growth Rate formula is that the benefit design of Medicare is defined benefit — if you go to the doctor, Medicare pays.
The premium support model changes things so that if you go to the doctor, you’re paying a much higher percentage of expected actuarial costs as your premium support voucher is insufficient to buy 84% Actuarial Value Medicare, so you’re now only buying 75% AV Medicare Minus and hoping you don’t get sick or at least die quickly and cheaply
Richard Mayhew
@Richard Mayhew: Premium support changes Medicare from a defined benefit plan to a defined contribution plan where the contribution grows slower than long term medical expenses so even if in year 1 the voucher is equal to 84% Medicare actuarial value, by year 10, the voucher only buys 70% or 75% actuarial value coverage.
Richard Mayhew
@Richard Mayhew: Theoretically I am not opposed to premium support models which are guaranteed to buy a certain actuarial value … the subsidy formula in the ACA is a premium support model that guarantees “affordability” to buy 70% actuarial value coverage so the government bears the vast majority of the medical inflation risk over the span of decades instead of individuals bearing it over the span of years.
But if you do that, the cost savings only comes from improving medical productivity or reducing stupid spending. It does not produce the offsetting cuts needed to get a magic asterick close enough to justify “centrist” praise for “fiscal prudence” in order to ram through big upper income tax cuts. For that, the premium support formula has to buy less care every year even as productivity increases.
Yatsuno
@Hoodie: Call out of Kasich’s violation of Saint Ronaldus Magnus’ Sacred 11th Commandment better happen.
Roger Moore
@srv:
The British NHS. The closest American analog would be VA for all or government-run Kaiser Permanente.
geg6
@Eric U.:
Yeah, the university is doing the same thing. Last year, they started offering a new option with a high deductible plan tied to an HSA for which they will give us princely $450 a year to “get it started.” All the open enrollment literature this year is nothing but a bunch of marketing material for that plan, pushing the idea that it’s the best option for everyone!
Yeah, right. There is no way this is the option for a woman of 58 years. I’ll keep my PPO, with its $1500 deductible and $10 and $20 co-pays at a cost of $68/month to me and whatever amount I decide to put into my flexible spending account. Too many things can happen to a woman my age and I have no desire to go broke if I should have a heart attack. Better that I’d die of the heart attack. I’m guessing that they’re pushing it so hard this year because mostly everyone took a look at the plan and said the same thing I did.
Yatsuno
@Roger Moore: Unfortunately the NHS was a historical creation that came from the clinics set up in Britain after WWII. Even if the VA were converted to general coverage their budget would have to skyrocket like mad and American taxes would shoot up like crazy. It’s not impossible but not even Teh Donald could sell that.
Hoodie
@Yatsuno: The interesting thing watching that video is how quiet the audience gets as Kasich runs down the liturgy of Medicare phase out, flat taxes and, finally, deportation. They seem to be increasingly uncomfortable as they sense the apostasy. It’s not so much that he violates the 11th commandment, but rather the violation of the sacred icons.
catclub
@Doctor Science: 10 year savings are no longer big enough. Now they go to 20 year savings,
but still leave out the denominator – what is the baseline spending they are reducing.
My understanding is that SS and medicare are about the same as defense department, which I am stuck on $600B/year.
This means theses savings are 17/600 = 2.8%. I also like how the 20 years savings are more than twice the 10 years savings.
They have put in some inflation factor ( on the nominal dollars) but probably have not assumed that tax receipts will also rise in nominal dollars – remember the fun you get when AEI reports are the basis of you economic predictions! Just pull a growth factor out of your ass.
catclub
@Eric U.: 1)I think Carson has already dropped his $2000/yr HSA for all plan.
2)I think that the best use of an HSA for all would be to buy health insurance with it [assuming they cannot refuse you coverage, which I am SURE the GOP will have taken care of]
catclub
@Yatsuno:
yes, but why cannot you 1) phase it in over 10-15 years ( at least)
and 2) realize that all other health insurance costs would go away, so the rise in taxes should be more than matched by the decrease in insurance costs?
Yatsuno
@catclub: Ask Vermont.
Real Change
Republican health care plan : get sick, die quickly.
same as it ever was, same as it ever was…
Germy Shoemangler
Colorado ballot initiative calls for single-payer health
http://www.denverpost.com/news/ci_28303871/colorado-ballot-initiative-calls-25b-single-payer-health
BGinCHI
RIP Paul Ryan, your next House Speaker.
Good luck, dumbass.
catclub
@Yatsuno: I think the US government has a great deal more taxing power than Vermont, plus the ability to run deficits. Also, VT cannot by itself change US tax policy on employer health insurance.
J R in WV
I’m hoping the Republicans continue telling everyone how they’re going to replace Social Security and Medicare.
I can’t think of a quicker way to end the Republican party than for them to continue telling their constituents that their masters plan to take away both their pensions AND their health care!!
I can’t imagine they have been stupid enough to talk about these things recently, but they have. And I’m just praying that the Hillary Campaign folks have captured video of these statements for future use.
We all know the Rs intend to take Social Security and Medicare away, they’ve been trying since FDR got it started. But the majority of the voting public can’t believe that the Rs would be that evil//stupid. But of course they are!
Poopyman
Can we talk about the reeeeally interesting stuff going on this afternoon?
JLENS Blimp goes on joy ride. Thousands without power.
Also too:
No doubt due to Pennsyltucky’s well regulated militia warming up for deer season.
Roger Moore
@goblue72:
Pensions are a wonderful way of providing retirement income, but only as long as they’re properly managed. Unfortunately, there’s a tendency for employers do declare contribution holidays because their returns have beaten expectations for a while, or for Mitt Romney and his ilk to look the pension funds if/when the company is taken over. 401k-type plans provide employees with some protection against that kind of malfeasance.
catclub
@Poopyman: The ‘thousands without power’ bit, is surprising to me. Is the tether dragging over power lines enough to short them out? Wow.
Roger Moore
@Yatsuno:
He was asking about what to do with a magic wand, so I presented my magic wand solution.
catclub
@Roger Moore:
In south Mississippi it is Singing River Health System. The managers/board decide in 2009 to stop making contributions to the pension fund, and don’t really tell anybody. Hijinx ensue! [SRHS is actually county owned.]
Yatsuno
@Roger Moore: Heh. My Green Lantern decoder ring has been broken doing Berniebot translations.
rumpole
HSAs don’t mean much if wages are declining, and none of that puts caps on the rising costs of procedures. It will never work (which is why no other civilized country follows this model). Just remember that these guys are competing for the right to hold the nuclear codes.
thalarctos (not the other one)
Means testing Medicare == more bureaucracy, and then the R’s will complain that money is being spent on bureaucrats instead of health care.