Reforming US healthcare programs

By Jay Kim

Medicare is an old welfare program in the U.S. that provides free health insurance coverage for anyone 65 or older. Currently, 40 million people are covered by Medicare, at a cost of about $700 billion. Twenty years from now, the beneficiaries of this program will have increased twofold in number to reach 80 million. We should feel happy about such an increase in the number of people that are 65 or older, but the biggest issues are who will pay this enormous cost and how. The concern is that as the way things are, it would not take too long for the revenue for Medicare, and then that of the whole country, to run out completely. Nearly 17 percent of the federal budget is spent on Medicare.

The problem is not just that. Doctors often send patients to specialists to get needless tests to avoid medical malpractice suits. These cases add to the cost of the government, which is rising sky high, and the medical claims are made directly to the government without the patient’s review and without anyone to check them responsibly. Hence, there is urgency in some people’s minds that this irresponsible system should be fixed at once.

Republican Vice-Presidential candidate Paul Ryan’s Premium-Support-Program, which is usually called a ``voucher program,’’ is a proposal to address such issues. Under this voucher system, the government gives money to those who are 65 or older to buy insurance plans from insurance companies individually, and each individual pays, or keeps, the difference between the vouched amount and the cost of the insurance policy that he or she buys.

This idea is based on the calculation that only under a system like this will insurance companies check medical claims one by one and protest the costs of unnecessary tests, which will naturally reduce the government’s cost. The concern is that rich people will buy expensive insurance policies, while poor people will buy cheap policies they can afford, which will generate another case of polarization. For this, Ryan’s voucher plan contains an idea to help the poor and seniors with costly long-term health problems with special vouchers.

This plan does not apply to those who are currently 65 or older but to include those who are 55 ― the ones who will be beneficiaries of Medicare in 10 years or later. The value of the voucher would be adjusted annually according to the inflation rate. Besides reducing the cost, it is more significant to give seniors the right to choose health insurance plans that they like instead of Medicare which is directly run by the government. The plan intends to reduce the deficit by taking the federal government out of the Medicare program and getting rid of the government agencies that are in charge of the program.

Next, let’s look at Ryan’s Medicaid reform.

Medicaid is a healthcare program that covers not only seniors but also the poor of any age. Its beneficiaries also include poor people that are 65 or older. These people supplement their Medicare benefits with Medicaid. Most of them are disabled seniors who need long-term care and treatments. Currently, the federal government covers 75 percent of the cost of Medicaid and the rest is paid by each state government. The problem is that the federal funds for Medicaid will also run out soon. Ryan’s plan on Medicaid is to change it into a block grant program whose management will be left to each state government which will receive block grants from the federal government. Many states seem to welcome the idea.

Since Republican presidential candidate Mitt Romney made a campaign promise to repeal Obamacare, it is expected that Ryan’s plan on Medicare and Medicaid will be carried out if Romney is elected.

It is not yet clear how American seniors will respond to this bold plan on Medicare. Both the Republican Party and the Democratic Party are aiming for senior votes with this issue, and each of them feels good, claiming that seniors are on its side. One thing to be sure is that the current Medicare system cannot continue as the way it is. It seems that it is also about time for Korea to reform its national health insurance system for its rising cost.

It is something to keep an eye on ― how Americans will respond to Ryan’s plan.

Jay Kim is a former U.S. congressman. He serves as chairman of the Kim Chang Joon US-Korea Foundation. For more information, visit Kim’s website (www.jayckim.com).