Johanns Says Democrats' Latest Proposal To Expand Medicare/Medicaid A Non-Starter

Press Release

Senator Johanns made the following statement today in response to news of Democrats expanding Medicare and Medicaid as a back-door attempt to vastly expand government-run health care.

"Hospitals today cannot keep their doors open on Medicare and Medicaid reimbursement rates alone. Further expansion of Medicaid will saddle states with an even larger unfunded mandate leading to state tax increases or cuts to essential services, and the Medicare program is already projected to be insolvent by 2017," Johanns said. "These programs are currently unsustainable and adding even more people is not a responsible solution. Even the non-partisan Congressional Budget Office has confirmed that this proposal would attract only the sickest individuals to Medicare, driving up Medicare premiums."

Fast Facts:
* The Medicare expansion proposal would allow people 55-65 to buy into Medicare if they did not receive insurance through their employers.

* The American Hospital Association has come out in opposition to the proposed Medicaid and Medicare expansions being proposed by the Democrats in their negotiations over the government plan. The AHA notes that "Medicare pays hospitals just 91 cents for each dollar of care provided, yet the proposal being considered would allow people 55-65 to enroll in Medicare instead of the insurance exchange under the public option. Medicaid currently pays hospitals just 88 cents for each dollar of care provided, but additional people at certain low income levels would be enrolled in Medicaid instead of the insurance exchange. ... Adding millions of people to these programs at a time when they already severely underfund hospitals is unwise and should be opposed.

* Senator Conrad told Politico today that the Medicare expansion would bankrupt hospitals in his state: ""It's got many of the same problems I have with previous versions of the public option,' said Sen. Kent Conrad (D-N.D.), who contends that hospitals in his state would go bankrupt. "That then ties you to Medicare levels of reimbursements for a whole new population.'"

* CBO has said that the Medicare buy-in program presents significant risk of an adverse selection risk spiral because only sick people will opt into the program. In their Budget Options book, CBO said that the risk of adverse selection "would put upward pressure on premiums and in turn reduce participation." Once premiums go up because of the premium death spiral, taxpayers would be left on the hook subsidizing increasingly expensive insurance. CBO said that expanding Medicare only to people age 62-64 would cost $1.2 billion, but this does not include any costs associated with a proposed subsidy.

* The Democrats are also proposing to expand Medicaid, a program which already is bankrupting states and which fails to provide access to care. This proposal shows that, for most Democrats, "health reform" is about expanding government, not expanding access to care.

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