The Spectacle Blog

Tentative Praise for Ryan’s New Bipartisan Medicare Plan

By on 12.15.11 | 10:35AM

Paul Ryan and Ron Wyden's introduction of a bipartisan Medicare reform plan will reshape the political landscape in ways that, in my estimation, benefit Republicans. It's worth considering, though, whether congressional Republicans who stuck their necks out to vote for Ryan's previous fiscal reforms should be disappointed that Ryan himself is now working with a Democrat on a different plan. Based on my understanding of the Ryan-Wyden reform measure, it's a winning proposition. 

Yuval Levin, a very credible conservative analyst, gives the basic outline of the plan and explains some of its merits at National Review. Essentially, the government would define minimum benefits based on what Medicare currently offers, and then allow private insurers and a government-run plan (traditional Medicare) to bid against each other to offer qualifying plans at the lowest price. The government would then set the subsidy based on the second-lowest bid, and give the funds to individuals to apply toward any qualifying plan they choose. The subsidy would also be capped to a "maximum growth index" that would ensure that it didn't grow too fast over time. 

Kevin Glass (who will be familiar to Spectacle readers) offers a critique of this proposal that flows naturally from Ryan's constant warnings about the dangers of the nation's ever-increasing debt, namely, that it wouldn't save as much money as Ryan's previous plans would have. The Roadmap was written to mandate significantly lower growth in the size of the subsidy, capping the federal government's liabilities at much lower levels. And Josh Barro at National Review notes that the Ryan-Wyden plan wouldn't be phased in for 10 years, meaning that there would be no real spending reductions in the short term. 

So Ryan-Wyden would, on paper, save less money than what is needed. I, for one, believe that introducing competitive bidding and consumer choice to Medicare, if done right, could lower spending by more than budget scorers project, but fair enough. Nevertheless, cost is only one of the many reasons to give Medicare recipients choice. 

By making traditional Medicare one among multiple plans, Ryan-Wyden would allow seniors to choose insurance based on a number of factors beside cost. Plans would have to compete not just on price, but also on quality, accessibility, customer service, reponsiveness, and many other factors. Seniors, finally, would become consumers of health care insurance, and likely would enjoy higher customer satisfaction. 

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