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DeMint Bill Expands Seniors’ Health Care Freedom

Posted By Robert Moffit On July 5, 2011 @ 1:00 pm In Obamacare | Comments Disabled

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Senator Jim DeMint (R–SC) and 12 of his Senate Republican colleagues recently introduced the Retirement Freedom Act. The bill would allow senior citizens to buy a better health plan than traditional Medicare, if they wish to do so, without having to give up their Social Security benefits.

Today, if a person who is retiring does not wish to enroll in traditional Medicare’s hospitalization program and instead wants to buy his or her own health care coverage, the federal bureaucracy forces that person to give up Social Security benefits as well. This is not a product of law, hammered out in congressional debate, but rather a result of regulation recently ratified by the judiciary. But it is also a severe penalty on the exercise of health care choice and a profound restriction on personal freedom.

While Medicare eligibility is statutorily linked to Social Security, the two programs are in fact very different programs that serve very different needs. Social Security, created in 1935, is financed through a federal payroll tax as a safety net pension program. Medicare Part A (the hospitalization program), created in 1965, is financed through a separate 2.9 percent payroll tax. (Medicare Part B, the part of the program that pays physicians, is voluntary and financed by a combination of enrollee premiums and heavy taxpayer subsidies.)

The DeMint bill would not change or reduce the Medicare payroll tax; it would simply permit seniors to forego the hospitalization benefits that they paid for if, in their judgment, they would rather pay for their own benefits or buy a better health package. Under Section 2 of the bill, a person who opts out of Medicare Part A may opt back into the program without being subject to any “penalty” in accordance with “a process” determined by the Secretary of Health and Human Services. As a technical matter, this may require some further refinement, such as the provision of risk-adjusted premium payment to offset any adverse selection at additional expense to the taxpayer.

As in education—in which the public school system benefits financially from parents’ personal decision to choose private options—if only 1 percent of seniors decide to pay for private hospitalization coverage, DeMint and his colleagues say that such a change will result in an immediate Medicare savings of $1.5 billion [2].

DeMint’s proposal is a small step to expand personal freedom. It points to a much bigger problem: Medicare’s financial burdens, accompanying the retirement of the baby boomers, will guarantee even greater restrictions on patient freedom. To cope with the larger problem, Congress and the Administration need to reform the entire program, providing each senior with a direct contribution to the health plan of their choice, as The Heritage Foundation has proposed in “Saving the American Dream [3].”

Meanwhile, because of the mounting problems facing the financially troubled Medicare program, Congress should quickly clarify its intent and open an escape hatch for seniors. The Medicare trustees report that Medicare Part A is running a cash-flow deficit of over $32 billion and faces insolvency by 2024. The Medicare Actuary reports that 15 percent of Medicare Part A providers will be operating in the red as a result of Obamacare’s record-breaking payment cuts [4]. Even worse, the Medicare Actuary projects that, under Obamacare, Medicare Part A providers face declining payment rates that will reach Medicaid levels. Because Medicaid pays doctors and hospitals so little, Medicaid patients often can’t find doctors to take care of them, let alone get high quality care [5]. When stupid government rules are the problem, freedom is always the right answer.

A senior fellow at Heritage’s Center for Policy Innovation, Moffitt is the co-author of Why Obamacare is Wrong for America [6] (HarperCollins/Broadside, 2011).


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/07/05/demint-bill-expands-seniors%e2%80%99-health-care-freedom/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/DeMint.jpg

[2] Medicare savings of $1.5 billion: http://demint.senate.gov/public/index.cfm?p=PressReleases&ContentRecord_id=60cc1f52-b794-4b06-b03e-821ebeaac7cc

[3] Saving the American Dream: http://savingthedream.org/

[4] record-breaking payment cuts: http://www.heritage.org/Research/Reports/2011/01/Obamacare-and-Medicare-Provider-Cuts-Jeopardizing-Seniors-Access?query=Obamacare+and+Medicare+Provider+Cuts:+Jeopardizing+Seniors%D5+Access

[5] let alone get high quality care: http://www.heritage.org/Research/Reports/2011/05/Medicaid-Provides-Poor-Quality-Care-What-the-Research-Shows?query=Medicaid+Provides+Poor+Quality+Care:+What+the+Research+Shows

[6] Why Obamacare is Wrong for America: http://www.wrongforamericabook.com/

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