Newswise — Sean Nicholson, professor of Policy Analysis and Management at Cornell University, Research Director of the Upstate Health Research Network, and Research Associate at the National Bureau of Economic Research, explains the House GOP plan to reduce federal spending by overhauling Medicare.
He says: “The GOP proposal to outsource Medicare to private insurers would make it easier for the federal government to save money. The government could credibly state that they would pay beneficiaries a certain amount of money per year that could be used to purchase an insurance policy, and this amount would increase at the rate of inflation.
“Having the federal government’s outlay increase at the rate of inflation would save substantial money because spending is currently forecast to grow 1 percent to 2 percent more than inflation per year for the indefinite future. As the gap between the voucher and the cost of private health insurance policies grows over time, Medicare beneficiaries would either have to pay more and more of the premium from their own pocket, or would have to settle for policies that cover fewer services or require greater cost sharing.
“Some states have argued that if the federal government allowed states greater flexibility in how they administer Medicaid, the states could increase the efficiency of the program. That is the goal of block grants. The key question is whether states can deliver on this promise, or whether states would engage in a ‘race to the bottom’ by slashing their Medicaid programs and forcing former enrollees to seek medical care elsewhere.”
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