Debbie Wasserman Schultz says Ryan Medicare plan would allow insurers to use pre-existing conditions as barrier to coverage

On the May 29, 2011, edition of CBS’ Face the Nation, Rep. Debbie Wasserman Schultz, D-Fla. -- recently named chairwoman of the Democratic National Committee -- criticized the proposal by Rep. Paul Ryan, R-Wis., to make significant changes to how Medicare works.

Currently, Medicare pays doctors and hospitals set fees for the care beneficiaries receive. Medicare beneficiaries pay premiums for some types of coverage, and workers contribute payroll taxes.
 
Ryan’s plan leaves Medicare as is for people 55 and older. In 2022, though, new beneficiaries would be insured by private insurance companies rather than the federal government, although they would receive "premium support" -- financial assistance from the government for buying insurance. People who need more health care would get a little more money.

The plans would be sold on an "exchange" -- a virtual marketplace -- and would comply with standards set by the U.S. Office of Personnel Management, which administers the Federal Employees Health Benefits Program. The plan gradually raises the Medicare eligibility age to 67 and provides smaller premium support to high earners. Medicare payments would rise but not at a rate that is expected to keep pace with the growth in medical costs.

The Ryan plan was passed by the House in a near party-line vote, but it has more recently prompted some Republicans to oppose it, amid fears that voters will not be comfortable with its approach.

Wasserman Schultz hit this point hard in her Face the Nation interview. "Like I said, the Republicans have a plan to end the Medicare as we know it. …" she said. "They would take the people who are younger than 55 years old today and tell them, ‘You know what? You’re on your own. Go and find private health insurance in … the health care insurance market. We’re going to throw you to the wolves and allow insurance companies to deny you coverage and drop you for pre-existing conditions. We’re going to give you X amount of dollars, and you figure it out.’ And these are people who have paid for their whole life into the system, are counting on that safety net."

However, critics, including the Weekly Standard, a conservative magazine, argued that the Ryan plan doesn’t -- as Wasserman Schultz said -- "allow insurance companies to deny you coverage and drop you for pre-existing conditions."

We decided to take a look.

We’ll start by noting that the budget resolution is a non-binding proposal that has already died in the Senate. So any such plan can make promises -- like no barriers from pre-existing conditions -- without ensuring that those promises will be kept.

That said, the language in the Ryan plan is clear: In 10 years, when the Ryan plan would kick in, anyone who is eligible for Medicare under today’s rules would be eligible to receive coverage under Ryan’s plan.

Here’s the language from the budget that passed the House: "Health plans that chose to participate in the Medicare Exchange would agree to offer insurance to all Medicare beneficiaries — to avoid cherry-picking and ensure that Medicare’s sickest and highest-cost beneficiaries received coverage."

The Congressional Budget Office -- Congress’ nonpartisan number-crunching agency -- took this promise at face value when it analyzed the plan.

In its description of the plan, CBO wrote, "Beneficiaries of the premium support payments would choose among competing private insurance plans operating in a newly established Medicare exchange. Those plans would have to comply with a standard for benefits set by the Office of Personnel Management. Plans would have to issue insurance to all people eligible for Medicare who applied and would have to charge the same premiums for all enrollees of the same age. The premium support payments would go directly from the government to the plans that people selected."

So the resolution itself and the CBO are in agreement: Under the Ryan plan, insurers participating in the revamped Medicare program would not be able to deny you insurance for pre-existing conditions.

When we contacted Wasserman Schultz’s office, a spokesman, Hari Sevugan, said that Wasserman Schultz stands by what she said. As supporting evidence, he provided a link to a paper by Paul Van de Water, a health policy specialist at the liberal Center on Budget and Policy Priorities.

The paper analyzes a Medicare proposal put together by Ryan and Alice Rivlin, a Democrat who headed the Office of Management and Budget under President Bill Clinton. The proposal, released in November 2010, is similar in many ways to the Ryan budget proposal that passed the House.

Van de Water (who did not respond to an inquiry for this story) wrote that under the Ryan-Rivlin proposal, "insurers would surely attempt to shun enrollees in poor health (who cost much more), as private plans do today in the Medicare Advantage program."

We initially thought that the provisions outlined in the Ryan-Rivlin plan had been changed before the resolution went to the House floor. However, a look at the Ryan-Rivlin plan itself (a two-page outline) shows that the protections for pre-existing conditions are there, too -- in identical language.

"Health plans which choose to participate in the Medicare Exchange must agree to offer insurance to all Medicare beneficiaries, thereby preventing cherry-picking and ensuring that Medicare’s sickest and highest cost beneficiaries receive coverage," the Rivlin-Ryan plan said.

So it seems that Ryan has been consistent on the question of pre-existing conditions.

Is there still a way to get around those protections? Possibly. "There are always ways for insurers to get around bans on pre-existing conditions -- put your office on the 8th floor of a building with no elevator, have no cancer specialists in your network," said Michael Tanner, a health policy specialist with the libertarian Cato Institute. But he added that the same criticism would apply to the health care law passed by the Democratic-controlled Congress and signed by Obama. "There's nothing uniquely structural to Ryan's proposal that would make it more subject to such evasion," Tanner said.

Meanwhile, just because prospective beneficiaries couldn’t be barred due to pre-existing conditions doesn’t mean the Ryan plan would be a walk in the park for them.

Linda J. Blumberg, a health policy specialist at the centrist to liberal Urban Institute, said that a plan that shifts a greater share of costs onto patients -- as the Ryan plan would likely do -- could hit patients with pre-existing, chronic conditions the hardest. "Big cost-sharing increases effectively shift more of the costs of providing care to those that use it most," she said. This would increase the pressure for insurers to cut back on expensive treatments, at least within the confines of the federal rules.

Wasserman Schultz is free to criticize the Ryan plan on any number of grounds, but in her comment, she went too far. Both the budget plan that passed the House and its predecessor, Ryan-Rivlin, specifically noted that coverage could not be prevented by a pre-existing condition. It may be easier to say you’ll bar "cherry picking" patients than it is to put it into practice, but Ryan has made his intentions consistently clear. We rate her statement False.

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CORRECTION: This version of the story corrects that the president cannot veto a budget resolution.