House Speaker Ryan’s Bipartisan Medicare Plan Nothing To Fear

Democrats have wasted little time attacking House Speaker Paul Ryan’s plan to make Medicare great — or rather, solvent — again.

Sen. Bernie Sanders has launched a “hands off my Medicare” campaign. Sen. Chuck Schumer is grimly warning against a supposed Republican “war on seniors.” And Rep. Nancy Pelosi has vowed to block any Republican reform of the health care entitlement for seniors.

What’s missing from this “Mediscare” offensive is any acknowledgement that Medicare in its current form is financially unsustainable. The fear-mongerers also fail to mention that Ryan’s approach actually has a long history of bipartisan support, and for good reason.

The plan — which would provide subsidies or “premium support” for seniors to purchase private coverage — promises to improve health care quality and expand choice while putting the program on sound financial footing.

It isn’t simply the best plan on offer for preserving Medicare; it’s a worthwhile reform on the merits.

Medicare is speeding off a fiscal cliff. Its own trustees recently warned that the program is on track to go bankrupt within just 12 years.

As of 2017, Medicare spending will grow more quickly than workers’ wages, the overall economy, and every other form of health spending. The program’s costs will balloon from $648 billion to $1.2 trillion over the next 10 years.

Absent reform, in other words, Medicare will eat up an ever larger share of federal spending, while delivering no additional improvements to the health of seniors.

Even former President Obama acknowledged the enormity of Medicare’s fiscal challenges, admitting that “we will not be able to sustain that program no matter how much taxes go up … It’s not an option for us to sit back and do nothing.”

Democrats in Congress have responded by ignoring the Medicare funding crisis — and making political hay.

Ryan has a better idea. His proposal would gradually open up the program to the same competitive forces that have driven down costs and improved quality throughout the rest of our economy.

Starting in 2024, his plan would provide subsidies or vouchers to seniors — known as premium support — that they could use toward their choice of private plans or traditional Medicare.

In order to ease the transition, Americans who are currently 55 or older would be free to stay in today’s Medicare program or opt for the premium-support model.

Insurers would compete against each other, and against Medicare, for patients’ business. As a result, coverage providers would be forced to keep costs down and offer the highest-value plans possible to win over customers. Seniors, meanwhile, would enjoy a variety of plan choices, ranging from basic, low-cost plans to more comprehensive ones.

Premium support is far from a radical, conservative idea. In fact, it was originally proposed by Henry Aaron, an alumnus of both the Johnson and Carter administrations, and Robert Reischauer, currently of the left-leaning Urban Institute. Premium support was also included in a 1999 recommendation from the National Bipartisan Commission on the Future of Medicare.

A recent study by the nonpartisan Congressional Budget Office concluded that a premium-support approach could reduce Medicare spending by as much as $275 billion over 10 years while still holding down costs for seniors.

In fact, something like Ryan’s premium support model already exists with the Medicare Part D prescription drug benefit. Costs for that program are running more than 40 percent below initial estimates, and surveys consistently show high levels of satisfaction among beneficiaries.

Americans deserve a fact-based discussion about the benefits of premium support. Unfortunately, Democrats seem more interested in scoring political points against Republicans than doing the hard work necessary to preserve the program for future generations.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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