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Republican Medicare Plan Criticized for High Costs

May 2011

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The battle over Medicare plans wage on as Republicans and Democrats argue over whether or not it should be left alone, remodeled, or scrapped entirely.

The most recent uproar in the last few weeks began when a new Medicare plan was put forward as part of the House budget, and approved April 15th. This plan is advertised as an affordable health insurance plan for seniors that would look much like the plan offered federal employees today.

But according to the New York Times' piece on this particular budget and health care bill, this promise doesn't hold true.

The issue is one of inflation. According to the bill all seniors from the year 2022 on would purchase a health insurance plan from a private company instead of receiving Medicare benefits. The government would then pay for a portion of this plan. The amount paid by the federal government would be a set amount that would increase with medical inflation.

But as we have seen in recent years, private insurance companies charge well more than medical inflation. Medical inflation has only gone up 10% in the last 10 years, while health insurance premiums have gone up 30% or more.

So, a senior citizen whose insurance costs were raised by their insurance company would have no recourse but to pay more. If insurance rates continue to rise as they are now, by the year 2030 the average senior citizen would be expected to pay over $400 each month for their health insurance.

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Medicare Plans in the News

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Programs such as Medicare and Social Security could face significant cuts?

And that's not an affordable health insurance plan by just about anyone's calculations.

This plan could be more effective if health insurance companies weren't allowed to raise their rates whenever they choose, but limits on these price hikes have met a great deal of opposition.

The battle over Medicare plans and cuts to both health care for seniors and social security has been waged by Republicans and Democrats for the last year. Republicans want to minimize the deficit by cutting entitlement programs. However Democrats argue that tax cuts for wealthier Americans should be eliminated to bring in more revenue.

It's not clear what will happen to this particular health care bill when it gets to the Senate, but it's clear that it's already making waves for legislators in the House.

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