Dear Constituents:

On April 5th the new House Republican-led Budget Committee released its budget for fiscal year 2012. Their proposal includes the elimination of Medicare as we know it.

Their budget calls for privatizing Medicare, beginning in 2022. As you know, Medicare today guarantees that every senior 65 and older receives health insurance that is affordable and accessible. This guarantee would be eliminated.

The new plan would give vouchers to seniors to buy coverage in the private insurance market. Wealthy Americans would get lower-value vouchers, while the sickest and poorest would receive additional assistance.

I believe this budget proposal is reckless and fails to answer some serious questions:

1. Is there any guarantee that the voucher would cover the cost of a basic plan, or even half the cost of a plan?
2. Will insurance companies cover seniors?
3. Will insurance companies charge higher rates to older seniors or those with pre-existing conditions?
4. Sicker seniors would receive larger vouchers, but who determines the health risks and how is that translated into dollars?

Medicare was created in 1965 because so many seniors could not afford to buy insurance in the private market. Insurance companies would not cover older Americans because they were too expensive to insure. In fact, when President Lyndon Johnson signed Medicare into law, only one in eight seniors had health insurance, while the rest exhausted their savings, sold their homes, or went bankrupt trying to cover their medical costs.

The Republican plan will reignite the same problems which led to Medicare's creation half a century ago because it eliminates guaranteed, affordable, accessible healthcare coverage for seniors.

It also means that for the first time, Medicare would be a voluntary program. Younger and healthier seniors may decide to opt-out, leaving an older and sicker pool of people to pay exorbitant premiums. Those seniors without insurance will still need care when they become ill, just as the uninsured do now...only this time it will be through an emergency room and the government will have to pick up the high tab.

Controlling the cost of Medicare must not interfere with the ability of seniors to access healthcare. I was highly conscious of this when we wrote the new healthcare law last year which saves $500 billion over the next ten years without interfering with Medicare benefits, primarily through eliminating overpayments to Medicare Advantage plans and equalizing them with standard Medicare plans. It also focuses on preventive health efforts which have proven time and time again as a way to reduce costs. These changes alone will add nearly ten years to the life of the Medicare Trust Fund.

Ironically, Republicans are also trying to repeal the health reform law which includes critically important patient protections to safeguard senior Americans from the most egregious insurance industry abuses, including:

• No discrimination based on pre-existing conditions
• No lifetime insurance caps
• Free annual wellness visits for Medicare beneficiaries
• Closes the prescription drug "donut hole"
• Increases doctor reimbursement for Medicare primary care services
• Eliminates all out-of-pocket expenses for preventive care under Medicare.

The budget is employing 'fear of the deficit' as a rationale for privatizing Medicare. I recognize the importance of controlling costs in our country...but privatizing and vouchering Medicare will do nothing to control costs. Any savings would come not from addressing our most pressing health issues—obesity, diabetes, tobacco use, heart disease, and stroke—but from issuing vouchers below the actual cost of health insurance. If health plans cost significantly more than the vouchers are worth, fewer seniors will use them to purchase insurance. While this would appear to save money, it comes at the expense of uninsured seniors and adds significant long-term costs to the healthcare system overall.

The House will likely vote on the budget proposal this week.

I will do everything I can to stop this ill-begotten effort to destroy Medicare, throwing seniors into the arms of the private insurance market. Medicare guarantees that the 78,803 seniors in my Congressional District will always have coverage for doctors, hospitals, treatments, surgeries and medicines they need. I think their budget proposal threatens the dignity and security of senior citizens, and again, I will do everything I can to fight and defeat this effort to privatize Medicare.

Should you want to receive updates on this issue, communicating via email is the least costly and most timely way to do so. Many constituents tell me how much they value this, so if you would like to be kept informed, you can go to my website at https://eshoo.house.gov and click on "Sign Up for ENews." Your email address will never be used by anyone except my office to communicate with you, and your tax dollars will be conserved by using electronic communications rather than traditional mailings.

Sincerely,

Anna G. Eshoo
Member of Congress