To: Representative Paul Ryan (R-WI) and Senator Ron Wyden (D-OR)
From: Hassan Katmeh (Marquette University Student)
Subject: Perfecting the competitive-system in health care
You proposed a bipartisan plan to reform Medicare which relies on a premium-support system for financing Medicare. Your plan intends to convert Medicare into a consumer-based model, which focuses on competitive bidding among health insurance plans. You also plan to create a fixed budget for Medicare spending, like a voucher system. In most other markets, competitive bidding tends to reduce costs; however, the insurance and health services market is different and assuming that competitive bidding will have the same effect in this market is a very risky. There is little evidence supporting the idea that competitive bidding will reduce costs in the insurance and health services market, in fact, there is evidence that suggests that competitive bidding might increase the costs in the insurance and health services market. (Tyson, 2011) You also intend to link your voucher to an index that has historically grown slower than health costs. By choosing to rely on this system, you are taking a big risk that could worsen the situation.
Health care costs are very expensive in the US, and the US spends more on health care than any other country in the world. The US puts 17.4 percent of its GDP to health care, which is the highest in the world. The Netherlands is second with them putting 12 percent of their GDP to health (Giamo, 2015). Your plan, which includes shifting beneficiaries from Medicare to private health insurance plans, will only help private insurers make money, and it will worsen the problem. As mentioned in the Laura D’andrea Tyson’s article “From...
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...om the House and the Senate to pass this bill. It will require persuasion and reconciliation, and it will also both parties to put differences aside and think about the future of American Health Care. Obtaining bipartisan cooperation on this proposal will be key in implementing this proposal.
Even if you were to get enough votes and pass through the House and the Senate, President Obama has stated that he opposes this plan (Baker, 2011). With these new changes, it is possible that he might reconsider this proposal and sign the bill. The original accusations against this proposal was that it would ultimately increase premiums for seniors, forcing them to leave Medicare and switch to private plans (Baker, 2011). However, since my new policy changed the link of the Medicare budget from economic growth to average health care costs, this problem should no longer persist.
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