Here’s a chart I used last week:
As you can see, the proportion of our GDP taken up by Medicare and Medicaid more than doubles over the next 70 years according to these projections. To me, this is the definition of “unsustainable.” There is simply no way these programs can continue without change.
Much has been written in the first few days of Paul Ryan’s entry into the national election about his budget plan, which includes a plan for reforming Medicare. To listen to the interviews on TV and the statements of Democratic politicians, the Ryan budget would destroy Medicare and cause older Americans to go without the Medicare coverage they have come to rely on. remember the ad where they showed Ryan pushing an older woman’s wheelchair off the cliff?
Well, here’s a little reality check:
The Obama campaign, upon learning of the Paul Ryan pick, went straight for the jugular. Ryan’s plan “would end Medicare as we know it by turning it into a voucher system, shifting thousands of dollars in health care costs to seniors,” said Obama spokesman Jim Messina this morning. But that’s not true.
As we’ve documented extensively at The Apothecary, the Wyden-Ryan Medicare plan—so named because it was coauthored by progressive Sen. Ron Wyden (D., Ore.)—only applies to Americans younger than 55 years of age, and gives those younger individuals the option of remaining in the traditional Medicare program, or choosing a comparable private-sector insurance plan.
The policy-wonk term for this approach is “competitive bidding,” an idea that originated with Democrats. The Wyden-Ryan plan is nearly identical to one that was introduced a few weeks earlier by Mitt Romney.
The bottom line: if Romney and Ryan leave you the option to remain in the 1965-vintage, fee-for-service, traditional Medicare program, and you claim that Medicare has “ended as we know it,” what you’ve really ended is the English language as we know it.
A prior version of Paul Ryan’s Medicare reforms—one that Mitt Romney did not fully endorse—would have required all future retirees younger than 55 today to join a private plan. But even describing that plan as “ending Medicare as we know it” is ridiculous. Both Obamacare and Ryan’s plan make changes to Medicare: Obamacare in the direction of government rationing, and Ryan in the direction of privatization. PolitiFact, the left-leaning fact-checking site, pronounced the “ending Medicare” claim to be the 2011 Lie of the Year.
Obama has cut Medicare more than Romney-Ryan would
As to the supposedly draconian nature of Mitt Romney’s Medicare cuts, they’re only exceeded by the severity of the Medicare cuts in…Obamacare.
According to the latest estimates from the Congressional Budget Office, Obamacare will reduce Medicare spending by $716 billion between 2013 and 2022, relative to prior law. These cuts directly affect current retirees. By contrast, both the Romney and Wyden-Ryan plans only affect retirees younger than 55. In other words, for better or worse, President Obama cuts Medicare more than Romney would.
In addition, President Obama’s budget uses exactly the same target growth rate for future Medicare spending as does the Wyden-Ryan plan: growth in gross domestic product plus 0.5 percent. The long-term difference between these two approaches, then, is not how much they reduce Medicare spending, but how.
Obamacare reduces Medicare spending using a government-centered approach. The law creates a new panel, called the Independent Payment Advisory Board, which will be composed of 15 unelected government officials, who will be charged with rationing care to seniors, primarily by underpaying doctors and hospitals.
The approach advocated by Ryan and Romney, by contrast, gives seniors more control over their own health dollars, allowing them to choose the plan that provides the best value for their money.
As Jim Capretta and Yuval Levin point out in an important new article, research from three liberal Harvard researchers indicates that the privately-run Medicare Advantage program can deliver the traditional Medicare benefit package 10 percent more cheaply, on average, than can government-run Medicare. And Medicare Advantage is tied down with all sorts of restrictions that make it less efficient. A Romney/Wyden-Ryan style approach, combining competitive bidding with premium support, is almost certain to generate even greater efficiencies and savings.