Insurance is all about risk. Medicare is an insurance program, and it works because it pools together everyone in the Medicare-eligible age group\u2014whether they\u2019re healthy or sick. By doing that, Medicare spreads the risk around: Some people are sick and need reimbursement, but the risks represented by those people are offset by the lower risk of others who aren\u2019t sick right now, or are simply very healthy.<\/p>\n

Medicare\u2014like other insurers\u2014can keep its costs\u2014and recipients\u2019 costs\u2014low, by having the largest risk pool possible. \u00a0That is the beauty of a single-payer system, of which Medicare is a highly successful example.<\/p>\n

And that\u2019s precisely where the Ryan\/Romney Medicare plan falls on its face. Ryan\/Romney turns Medicare into a privatized voucher program. Under the Ryan\/Romney plan, Medicare-eligible seniors will be encouraged to seek out private insurers for their \u201cMedicare\u201d plan. Paul Ryan boasts that this is a way to save money. It\u2019s not, and that risk pool deal is the reason.<\/p>\n

When everyone goes out shopping for variegated, private Medicare plans, they\u2019ll be breaking up the Medicare risk pool into much smaller puddles. Insurers who manage these reduced pools will have less risk to spread around among their customers, so, they\u2019ll inevitably charge higher premiums to cover the additional risk. If I\u2019m not mistaken, this is basic actuarial math.<\/p>\n

Unfortunately, we\u2019re not hearing much about this in the mainstream press. Maybe that\u2019s because no one understands the risk pool or has bothered to look into it. But knowing about the vaporization of the current, giant Medicare risk pool is essential to understanding what\u2019s wrong with the Ryan\/Romney plan.<\/p>\n

Additional side effects<\/strong><\/p>\n

The risk-pool breakup would have other ramifications, too. The reason that so many doctors and hospitals participate in Medicare–and accept its low reimbursement rates– is that the program provides a guaranteed stream of patients. In a shrunk-down, Ryan\/Romney Medicare world, healthcare providers could have less incentive to take on the reduced volume of patients\u2014and they\u2019d have even more insurance companies to deal with.<\/p>\n

Also, as the pool shrinks, Medicare will lose its clout in negotiating rates for services and pharmaceuticals. The burden of higher costs will fall to seniors.<\/p>\n

Finally, there\u2019s this troubling idea, suggested by a reader of Andrew Sullivan\u2019s The Dish<\/a>:<\/p>\n

\u2026The Ryan plan destroys the political\/social contract between older citizens and younger workers. Why should I continue to pay for the healthcare of people who happen to be over 55 when the Ryan plan says I have no chance of ever getting that kind of coverage?… Ryan\u2019s plan creates a generational divide that will eat away at the consensus behind providing health care for older citizens, which is what I suspect he wants.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Insurance is all about risk. Medicare is an insurance program, and it works because it pools together everyone in the Medicare-eligible age group\u2014whether they\u2019re<\/p>\n","protected":false},"author":3,"featured_media":17512,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1176,1136,113,16],"tags":[193,1669],"yoast_head":"\n