Republicans supporting the “Ryan” Medicare plan (i.e., giving individuals vouchers to buy private insurance) claim that it will work similar to the health insurance that federal employees receive.
But as the N.Y. Times reported, there is a key distinction. Under the federal employee plan, the government pays a fixed percentage of premiums (on average 72%). Thus, even if health care costs dramatically increase, the government will still pay around 72% of the health care costs.
Under the Republican plan, increases to vouchers will be based on the Consumer Price Index. Because health costs have historically far surpassed the CPI, an individual’s share of his or her health care costs will grow higher and higher. So the voucher may start paying for 72% of health care costs, but if health care costs continue to grow faster than the CPI, that percentage will decrease each year.
Christopher is an attorney that specializes in aging and special needs issues. He can be found at http://www.smithelderlaw.com and on Twitter @elderplanning.