[Posted by Karl]
Sen. Ron Wyden (D-OR) has joined House Budget Chairman Paul Ryan (R-WI) on a bipartisan plan to revamp Medicare. The crux of the matter is that Ryan ostensibly gets a premium support plan of the sort he has long championed, while Wyden ostensibly gets traditional Medicare enshrined as one of the options for seniors’ helath insurance.
Ed Morrissey likes the introduction of more competition into the Medicare system and the supposed political benefit of potentially blunting Democrats’ Mediscare tactics in the upcoming election. Ben Domenech asks eight questions of Ryan that need to be addressed (although I think Ben’s concern about the lack of means-testing overlooks that the plan contemplates wealthy seniors getting less) and fears the Ryan-Wyden proposal will be viewed as a “walkback” that will actually hurt Republicans who stuck out their necks on the Medicare reforms Ryan included in the House budget.
On a political level, the fact that the GOP frontrunners are already closer to Ryan-Wyden than the House budget suggests to me that the proposal will not affect the overall political environment much. On a policy level, given that this is a mere proposal, rather than legislation, most of the devil will be in the details. Aside from Domenech’s primary point that it may be too late on a solvency basis, the two questions that concern me most are: (1) the potential for Medicare to engage in unfair competition in the premium support system (as the so-called “public option” would have under Obamacare); and (2) relying on Congress and the Independent Payment Advisory Board to restrain costs.
The latter is actually somewhat less of a concern to me than you might think. Kicking the cost can down the road is already the status quo. The introduction of IPAB under Obamacare pushes the system in the direction of rationing by cutting payments to hospitals and doctors, which will force many doctors out of the health care system, decreasing access and likely quality of care. Getting a premium support system in place at least advances market competition as the alternative for cost containment, which is more attractive as policy and politics.
However, that assumes fair competition, which is why the role Medicare would play in the new system is key. To be effective, a premium support system including Medicare would have to reform Medicare to make it equivalent to a private plan, without taxpayer subsidy… and that’s where I think Dems would start an enormous pushback, even though Pres. Obama essentially conceded the argument during the debate over Obamacare. Nevertheless, Ryan may be calculating that Republicans would rather have a debate over reforming Medicare to eliminate unfair competition than its outright elimination.