The system proposed by Schumer would give health-care providers a financial incentive to withhold care from sick seniors because each and every service or treatment they provided would cut into their profit margin--or cause them to lose money.
Under the current fee-for-service Medicare system, Medicare payments are already so low that many doctors do no take new Medicare patients because it costs them too much to do so, or they transfer the costs of treating Medicare patients to private insurance holders by charging higher rates to them.
Yet Schumer sees greedy doctors as Medicare's root financial problem.
"The root of the problem is a cost-plus system," said Schumer of Medicare on "Meet the Press." "When you're sick, the doctor gets paid for each service, each prescription, each pill, each test. If you were to tell doctors you get a certain amount of money to treat Jim Smith, who has a certain form of diabetes, say $10,000, every study shows that you'd save hundreds of billions of dollars without cutting benefits to people. That's what Democrats stand for."
Schumer outlined this proposal while attacking the reform proposed by House Budget Chairman Paul Ryan (R.-Wis.), which Schumer said would "end Medicare as we know it."
In fact, the Ryan plan, included as a long-term goal in the budget approved by the Republican-controlled House of Representatives earlier this year, would not change the Medicare system at all for Americans 55 or older. Younger Americans under Ryan's plan would receive a federal subsidy to pay the premiums on a guaranteed health-insurance plan that they would choose and purchase.
Under the Ryan Medicare reform plan, decisions about what health coverage and services to buy or not buy would be in the hands of the individual American. Under the Schumer Medicare plan, decisions about what health coverage and services seniors would get would be in the hands of Medicare bureaucrats who would decide what flat fee any particular illness was worth and in the hands of health-care providers who be able to increase their income by decreasing care and who could go broke if they provided needed care to a sick patient that cost more than the Medicare bureaucracy's one-size-fits-all flat fee.