IF ONE WERE TO FIND a stray copy of the Democratic National
Committee’s 2012 playbook, perhaps inadvertently left at a Capitol
Hill happy hour by a hapless intern, the left’s obsession with
Wisconsin Rep. Paul Ryan would become immediately clear.
Ryan, the House Budget Committee chairman, has proffered an
ambitious plan that would, among other things, reform Medicare, the
federal health care entitlement program for seniors.Democrats
intend—and indeed already have begun— to use Ryan’s plan as a
bludgeon against Mitt Romney and other GOP candidates further down
the ticket.
President Obama has said that Ryan’s plan would “end Medicare as
we know it.” (As if Medicare weren’t speeding toward
self-destruction on its own.) The DNC’s Chairwoman and Chief Pit
bull, Rep. Debbie Wasserman Schultz, went further, calling the plan
“literally a death trap for seniors.”
With all due disrespect to the congresswoman, it is Obamacare
that should make seniors’ hair (or what’s left of it) stand on end.
The president’s signature “reform” law will cut Medicare spending
and lead to de facto rationing within the program.
Ryan’s plan exempts today’s seniors from any Medicare changes;
Obamacare’s mangling of the program will apply to even those who
have already retired. Further, Ryan would give workers under age 55
a choice between a private plan and traditional Medicare when they
retire.
OBAMACARE BOOSTERS BRAG that it will expand coverage to
uninsured Americans. What’s left unsaid is that the law offsets
those new outlays by slashing Medicare payments to doctors and
hospitals by $1 trillion over the next 10 years alone, according to
the latest CBO projections.
Indeed, the program’s chief actuary reports that by the end of
this decade, Medicare’s payment rates to doctors and hospitals will
drop below those of Medicaid, which already pays so little that
many doctors do not accept it, leaving poor participants Unable to
find timely, essential health care. Ultimately, Medicare payment
rates are projected to fall to one-third of the rates paid by
private insurers.
Obamacare also establishes the Independent Payment Advisory
Board (IPAB), an unelected body with the power to adopt still more
cuts in Medicare payments as it deems necessary without any further
congressional action. As the chief actuary reports, “The Secretary
of [Health and Human Services] is required to implement the Board’s
recommendations unless the statutory process is overridden by new
legislation.”
Such draconian cuts will undoubtedly create health care chaos
for seniors. Two-thirds of hospitals are already losing money on
Medicare patients, according to the chief actuary. Doctors and
hospitals that provide critical care to the elderly, such as
surgery for hip and knee replacements, sophisticated MRI
diagnostics, CT scans, and even treatment for cancer and heart
disease, will either withdraw from serving Medicare patients or
face staggering financial losses. If the government refuses to pay
competitive rates, then seniors are not going to receive the
treatment and care they need. These dramatic cuts are a form of
government heath care rationing—albeit a ham-fisted one.
This is not the way to solve Medicare’s fiscal problems. It’s
like trying to cut the Pentagon’s budget by simply refusing to pay
manufacturers full price for the Air Force’s planes, the Navy’s
ships, and the Army’s tanks and artillery.
CONTRARY TO THE CHILDISH SILLINESS of Wasserman Schultz, Ryan’s
Medicare reforms would simply extend to Medicare Parts A and B the
popular and successful policies of Medicare Parts D and C, which
would reduce costs through market competition instead of
rationing.
Medicare Part D, the prescription drug program, works just like
Ryan’s proposed reforms. The program provides seniors with premium
support payments, which they use to purchase private prescription
drug coverage of their choice. Because of market competition and
incentives for seniors to choose lower-cost plans, Part D costs
have run 40 percent below projections.
Medicare Part C, otherwise known as Medicare Advantage, already
allows nearly 25 percent of seniors to choose private insurance
instead of traditional Medicare coverage.
Private insurers competing for seniors under this reform would
be required to take all who chose them, at standard market rates,
regardless of age or health condition, with no exclusions for
pre-existing conditions.
Ryan’s Medicare would provide higher payments to the insurers of
sicker seniors and assess fines on those covering more low-risk
seniors. Seniors could also choose Health Savings Accounts, which
provide further incentives for individuals to control their own
health spending.
For these reasons, the Ryan plan has drawn support from some
unlikely sources, including ultraliberal Oregon Sen. Ron Wyden and
longtime liberal academic Alice Rivlin, the “godmother of the
CBO.”
Basic, fundamental, structural reforms such as these could help
make entitlement reform politically feasible and would ultimately
reduce government far more than simple slash-and-burn benefit
cuts.
Even larger spending reductions could be achieved by allowing
workers the freedom to put their Medicare payroll taxes in personal
savings and investment accounts. Over an entire working career and
assuming only standard, long-term market returns, a participant
would accumulate enough capital to pay an annuity roughly three
times what his Medicare payroll taxes provide. Seniors could use
those annuity payments to further finance their private health
insurance. Such a system could, quite possibly, close Medicare’s
entire, enormous, longterm financing gulf with no tax increases or
further spending reductions.
The accounts would not just trim the growth of Medicare
benefits, but also shift all the spending financed through those
payroll taxes to private savings, investment, and insurance—which
would on its own produce the biggest reduction in government
spending in world history.
