Letter From Democratic Senators Underscores What’s at Risk for Medicare

Twenty-one senators, led by Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., are awaiting a response to a letter recently sent to President-elect Trump asking for clarification on his campaign promises of rejecting cuts to Medicare and Medicaid.

“During your campaign for President of the United States, you differentiated yourself from your 16 primary opponents by noting that you were the only Republican who would protect Medicare and Medicaid,” the senators wrote. “After winning the election, you suddenly appear to be using language supporting policies that would gut the Medicare and Medicaid programs.”

The letter specifically calls attention to Trump’s appointment of Rep. Tom Price, R-Ga., to head up the Department of Health and Human Services, as Price has been one of the leading voices in Congress to repeal the Affordable Care Act (ACA), known colloquially as Obamacare, which would have significant repercussions for both Medicare and Medicaid, and has also been a “leading architect” of Republican proposals to privatize the two federal health care programs.

Cuts to or privatization of Medicare, the federal health care program for Americans over the age of 65, could have a serious impact on all Americans, most of whom would be insured through Medicare at some point in their post-retirement lives.

Which is why the senators who sent the letter are eager to hear from Trump about his intentions, especially given his campaign persona as a straight shooter and the way he distinguished himself from the large field of GOP challengers with his promise not to touch Medicare.

Since winning the election, however, not only is Speaker of the House Paul Ryan, R-Wis., talking about privatization, but the Trump transition team is echoing this sentiment on its own website, a direct repudiation of what Trump said throughout the grueling campaign season.

Which is why Warren, Wyden, and their colleagues in the Senate are asking for some clarification.

Medicare is now fairly straightforward to navigate: Individuals sign up for either a traditional Medicare plan or a number of well-regulated “Medicare advantage” plans, which are Medicare plans run by private insurance companies and not the government. All such Medicare plans, however, guarantee a certain set of benefits that all enrollees know their plans will cover.

If, as Speaker Ryan suggests, Medicare were to transition to a plan involving tax credits that effectively serve as vouchers for the purchase of private coverage, there is no guarantee to potential enrollees that a given set of benefits would be covered or that a plan purchased through a private insurance company would offer comparable coverage to Medicare or Medicare advantage plans.

Furthermore, Democrats argue, there is no guarantee that the amount of money Americans might receive in tax credits or vouchers will increase in a way that keeps up with rising medical costs and inflation — a situation that could be compounded given that medical costs have risen faster than inflation for the past few decades.

Thus a voucher or tax credit system might not guarantee that the same amount of coverage a person is able to buy at the age of 70 will equal the amount of coverage he or she is able to buy at the age of 80.

Another Trump talking point being challenged by the senators’ letter to the president-elect is the notion of the block granting of Medicare funding, something that, some say, would allow states access to the same funds now guaranteed by the federal government to administer Medicare and Medicaid but without the federal regulations currently tied to that funding.

Also of note is that Price has long advocated for “balance billing” when it comes to Medicare, a process that could have a significant impact on the bank accounts of seniors who are insured through the program. Currently, balance billing is prohibited for Medicare, meaning that those eligible for Medicare are not allowed to be billed by their health care provider for an amount higher than the amount for which Medicare will reimburse that provider. And because most physicians want access to the Medicare market, gross overbilling does not occur right now as a result of supply and demand. But should Trump and Price act on Medicare privatization, they might also do away with the billing safeguards now in place, meaning that seniors might visit a physician using their Medicare plan but still end up with a — potentially substantial — bill for the amount that is not reimbursed.

An additional benefit at risk should the current Medicare system be overhauled is prescription drug coverage. Under ACA, brand-name prescription drugs were substantially discounted for seniors, with an established timeline of seniors paying no more than 25 percent of the cost for any prescription drug under Medicare by 2020. Repealing ACA, then, could potentially affect not just younger Americans with health insurance provided through their employer or purchased through the marketplace, but seniors insured through Medicare who depend on certain benefits for their economic security.

Which is why it’s important to remember — as the letter sent by Warren, Wyden, and their colleagues reminds us — that when the incoming Trump administration talks about “repeal and replace” when it comes to ACA, it’s not necessarily a clean-cut and linear process. The complexity of ACA and the myriad components of insurance coverage for practically all Americans it touches means that its repeal could have consequences perhaps not fully anticipated by the American voter, including seeing benefits that impact our seniors through their Medicare coverage put at risk.

And it’s not only seniors who face significant challenges should there be an overhaul of Medicare or impactful changes to the program caused by a repeal of ACA. Young people are the ones who potentially stand to lose the most should the program be privatized, as seniors currently covered under the program might have many of their benefits grandfathered. But young people who are looking ahead and preparing care plans for themselves and their parents might be left with a system that greatly reduces the number of guaranteed benefits and, instead, offers vouchers that might only cover a fraction of the care Americans need in their later years.

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