A new report by economists at the liberal Center for Economic and Policy Research looks at House Republicans' plan for privatizing Medicare from a new angle, and finds that it could increase health care costs for beneficiaries by a staggering $34 trillion over 75 years.
You won't find these expenditures on the government ledger. They represent the amount of money Medicare beneficiaries would have to pay out of pocket if they wanted to buy insurance policies that provide Medicare-equivalent benefits.
The reasoning is fairly straightforward, according to CEPR's Dean Baker and David Rosnick.
The money the government currently spends every year on Medicare doesn't cover every penny of health care its beneficiaries consume. The government agrees to pay a fixed percent, and the rest falls to the beneficiaries who share in the cost of the services they and their doctors order. The sum of those two numbers -- both of which are expected to rise steeply over time -- is the total cost incurred by Medicare. Under the House Republican plan, the government holds fixed the amount of money it's willing to pay per patient per year, and leaves the residual costs for seniors to sort out with private insurers. Because private insurers are smaller, profit-driven, and less efficient than Medicare, those out-of-pocket costs will be significantly higher than they are now. And they'd grow much, much faster. Over the course of the program's 75 year planning period, the difference would amount to $34 trillion...............