Trouble with sums

As God is my witness, I cannot make sense of Paul Ryan’s plans for Medicare.

Whatever my concerns about a voucher system for education reform, I can at least understand how that system is supposed to function.  Don’t want to send your kid to PS 26?  Apply your voucher toward tuition at St. Swithin’s.  (Hard luck, PS 26!)  Tuition being a relatively predictable expense, families know how much they’re on the hook for Junior’s elocution and fencing lessons.

Medical expenses for the elderly are a different story altogether.  As health deteriorates with advancing age, there is little way of knowing how much one’s medical costs are going to increase.  Obviously, one can live as healthy a life as possible, but that’s hardly a guarantee of avoiding illness.  Chronic illnesses can destabilize.  New diagnoses appear.  Complications beget complications.  (More on this in a bit.)

As best I can see it, there are three plausible approaches to Ryan’s plan.

1)  Hope/pretend the vouchers will pay enough to make medical care affordable for senior citizens.  I assume this is the approach Rep. Ryan himself is taking.  Trouble is, this doesn’t seem to be the case.  Certainly the CBO doesn’t seem to think so. Everything I have heard or read says the same thing — out-of-pocket costs for the elderly will rise dramatically.

2)  Hope that insurance companies or hospitals will charitably absorb the costs of caring for senior citizens. Asks Benjy Sarlin at Talking Points Memo:

At first glance, Paul Ryan’s plan to send millions of seniors into the free market with dwindling vouchers in hand might seem a boon to the private insurance industry. But would companies even want to participate?

Good question!  He quotes an industry lobbyist:

Dan Boston, a veteran lobbyist for health care providers and co-owner of Health Policy Source, said in an interview with TPM that he was taking a “wait and see” approach on the GOP budget before judging its value. (The American Hospital Association opposes the plan). But he cautioned that a major concern would be whether hospitals and private insurers would be left on the hook for low-income seniors eligible for both Medicare and Medicaid, who could run up significant costs with little hope of ever paying them off.

Someone is going to be left paying what vouchers won’t cover.  Never having known insurance companies to confuse themselves with charities, I predict some pretty vociferous opposition on their part.  And while hospitals will frequently write off the costs of caring for patients who can’t afford it, crushing them under the burgeoning costs of an entire generation’s medical expenses seems an unsustainable plan.

3)  Soak the elderly.  Who’s left to pay?  The patients themselves.

One might argue that those of us who wouldn’t be qualifying for Medicare within the next ten years (thus being eligible for the program as is) should start saving now, having been given ample warning.  I happen to think that’s for the birds.

How much should a person be expected to save to avoid being rendered indigent because of medical costs or dead because of deferred care?  What diagnoses should one be expected to pay for?  The cost of the medication alone for the standard chemotherapy regimen for many cancers is about $14,000, not counting anti-nausea medications, medications to combat the effects on the immune system, doctor’s fees, hospital costs, surgery to remove the primary tumor, various tests and a whole host of other expenses.  I had a hard time finding actual numbers about what an individual patient might have to pay, but this woman’s total seems about right.  (I did not search any databases using my hospital privileges, presuming most patients seeking this information would not have similar access.)  Do we really believe senior citizens should have additional hundreds of thousands saved, on top of their other retirement planning, just in case they get ovarian or lung cancer?

Further, with advancing years come declining faculties for many.  There’s a reason so many hucksters and frauds prey upon the elderly.  It seems callous at best to expect older patients to navigate the vagaries and exigencies of the free market even as their risk for dementia rises.

Keeping the elderly from the extremes of poverty or the tragedy of deferred care was the whole point of Medicare in the first place.  I will not argue that there is not a need for reform, and will give Rep. Ryan credit at least for broaching the topic.  But giving out vouchers that shift the burden of their own care onto the shoulders of some of our most vulnerable citizens is bad policy, to say nothing of its morality.

Russell Saunders

Russell Saunders is the ridiculously flimsy pseudonym of a pediatrician in New England. He has a husband, three sons, daughter, cat and dog, though not in that order. He enjoys reading, running and cooking. He can be contacted at blindeddoc using his Gmail account. Twitter types can follow him @russellsaunder1.


  1. Could we expect the elderly to pay for their own medical care until they qualify for Medicaid?

  2. I believe this is correct. I also believe this is the kind of plan that we are likley to end up with, though somewhat less generous as it will be forced on us by our creditors who won’t give a hair about healthcare for seniors and the needy. Read “Penny Health Insurance” articles if you dont have insurance.

  3. “How much should a person be expected to save to avoid being rendered indigent because of medical costs or dead because of deferred care?”

    The amount of their out-of-pocket maximum, plus the premiums. Just like everyone else does.

    “Keeping the elderly from the extremes of poverty or the tragedy of deferred care was the whole point of Medicare in the first place.”

    Yes; but does that imply “full payment for any treatment they choose”? It’s the same old “rationing” question again. Is our obligation to seniors “save you from dying” or “fund six trips to the Sleep Therapy Center when the reason you can’t sleep is that you drink three whiskeys every night before bed”?

    • The amount of their out-of-pocket maximum, plus the premiums. Just like everyone else does.

      With the assumption, of course, that the insurance companies will cheerfully pick up the tab for the remainder. I am skeptical that said companies will do so for the population in question, given how much more expensive it will be to cover them as compared to younger and healthier cohorts. See point 2 above.

      Re: your straw patient with the sleep problems, I am sure there that no matter what solution is reached, there will be some degree of discrimination about what is and is not covered. However, while it has been some time since I managed the medical care of any senior citizens directly, most of them had health problems that could not be solved with the simple behavior modification you so glibly imply.

      • Is there *ANY* dollar amount at which we, as a society, can say “we’ve spent quite a lot on (individual) and, from this point on, we’re only going to pay for pain relief” or something similar?

        • That’s a good question. Crafting policy broadly that will allow for judicious and appropriate decision-making in individual cases seems prohibitively difficult. Plus, once you start making decisions based on cost, expect someone to come up with a catchy phrase like “death panels.”

  4. Your argument is exactly why the Feds should cap insurance/out-of-pocket expenses per year (say, 20% of income). And why the Feds should collect from your estate if you use this service; the elderly are the wealthiest demographic, and we don’t means test currently. Why a young couple starting a family should pony up for some millionaire’s Medicare expenses so she can pass more on to her beneficiaries is beyond me.

    • I think there are good arguments for means testing when it comes to Medicare and Social Security. If Rep. Ryan had gone this route with his reform plan, then it would have at least made some sense to me.

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