Romney’s proposal for Medicare would benefit insurance companies, raise costs for seniors
Republican presidential candidate Mitt Romney has been attacking the Obama administration for “cutting” Medicare, and Romney has promised to restore these cuts. While Romney is saying that he will protect Medicare, in fact he is protecting health insurance companies, while out-of-pocket costs for seniors will go up.
As part of the Affordable Care Act, $716 billion was cut from Medicare spending (not funding). A big chunk of this cut was reducing spending on the Medicare Advantage program, a failed privatization plan. Medicare Advantage turned over a part of Medicare to private health insurance companies. But instead of costing less, it has always cost more than the government Medicare program to provide the same benefits. This is a no-brainer since the private, for-profit insurance companies have to pay dividends and huge executive salaries that Medicare does not. This is why 98% of Medicare spending goes to health care, while private insurance companies have spent only 80% or even less, with the rest going to shareholders, executives and waste. The Affordable Care Act tries to reign in this spending.
Medicare is paid for by the same payroll tax as Social Security, listed as FICA (Federal Insurance Contribution Act) on your paycheck. By increasing spending, the Romney plan would speed up the date where funding for Medicare runs short of projected costs, from 2024 to 2016. So why would Romney want Medicare’s financial problems to come sooner rather than later? Probably in order to push a scheme to privatize Medicare, turning it over to private insurance companies and doubling the cost to seniors.
This increase in spending would also lead to higher costs for seniors. Researchers estimate that the average senior on Medicare would pay almost $350 a year more in out-of-pocket costs to help pay for Romney’s proposed spending increase.
Fight Back! encourages all of our readers to say no to Romney’s plan, the Republican agenda and the 1% by joining the massive August 27 protest at the Republican National Convention in Tampa, Florida.