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Medicare's Least Bad Fix

Why RyanCare beats ObamaCare in a knockout

Shikha Dalmia
June 14, 2011

Let me say at the outset that I think both ObamaCare and RyanCare are a dog’s breakfast, a hodgepodge of unappetizing ideas that won’t cure the nation’s core health care problem—out-of-control spending—ObamaCare because it is reckless and RyanCare because it is feckless. 

That said, if both were implemented as written, RyanCare would be far less injurious to seniors than ObamaCare or, for that matter, doing nothing.

That hasn’t stopped Democrats from portraying RyanCare as the evil brainchild of Jeffery Dahmer. One ad by the Agenda Project, an allegedly progressive outfit, shows a look-alike of Rep. Paul Ryan, the Wisconsin Republican who authored RyanCare, pushing a wheelchair-bound old lady off a cliff. Not to be outdone, Secretary of Health and Human Services Kathleen Sebelius has opined that seniors would “die sooner” under RyanCare. 

And the president himself has said that RyanCare will “end Medicare as we know it.” By that he presumably means that it won’t give seniors limitless benefits forever at taxpayers’ expense, no questions asked. But the truth is that there is no scenario that could give seniors that. 

Medicare recipients have historically received benefits worth several times what they have paid in payroll taxes. That was possible because there was a large worker-base supporting retirees. In 1965 there were 4.6 workers per beneficiary. With baby boomers retiring, by 2050 this number will be only 2.2. We can impose confiscatory taxes on these working stiffs or mortgage their entire incomes and still be unable to pay for all the benefits that seniors currently get. 

Given these fiscal realities, if we do nothing, there will come a point when Uncle Sam will have to slash Medicare coverage so severely that, for all but the rich, “dying sooner” will actually seem like the best coverage option. But ObamaCare will make matters worse. Much worse.

Official calculations show that Medicare has $34 trillion less than it needs to keep all its promises to seniors. Yet ObamaCare will take $500 billion out of Medicare over 10 years to cover 30 million uninsured Americans.

Basic arithmetic suggests that this would hasten the demise of the program. Not so, according to President Obama. He says he’ll squeeze out savings by cutting reimbursement to providers. ObamaCare will create something called the Independent Payment Advisory Board, composed of 15 experts. Their job will be to hold down spending by identifying reimbursement cuts, and their recommendations will be binding on Congress. If this board recommends what many fear it will, Medicare’s reimbursement rates will drop below Medicaid’s, which will mean that doctors will turn away seniors like they do the poor. In effect, in addition to an early death option, ObamaCare offers seniors diminished access to quality care. If this is compassion, give me cruelty.

RyanCare is not perfect, but at least it won’t rob Grandma Millie to buy Cousin Joe coverage. It will allow all those who are 55 or older right now to stay in the current Medicare program. But come 2022, everyone presently younger would get an average of $15,000—the amount Medicare would spend per beneficiary—in “premium support” to use toward a health plan of his or her choice. Low-income and sick seniors could get up to another $8,000 or so. 

This is hardly ungenerous. But liberals are still crying bloody murder. Why? Because RyanCare would raise the “voucher” amount annually based on general, not medical, inflation. And since medical inflation outpaces general inflation, with every passing year the voucher would buy less, and seniors would be on the hook for more.  

But this misses the point even worse than Dwyane Wade missed the tying free throw for the Miami Heat Tuesday night. RyanCare wants to give seniors control over their Medicare dollars precisely to unleash their market power to curb medical inflation. It might not fully succeed, because it won’t let seniors buy coverage from wherever they like. Rather, it will limit their options to expensive plans, with all kinds of unnecessary bells and whistles, on a federal exchange. Still, it will cut inflation somewhat. And the savings that result would go directly into seniors’ pockets, not skimmed off to pay for someone else’s coverage. 

There is one thing, however, that Rep. Ryan could—and should—do that would prevent Democrats from strangling RyanCare. He modeled his idea of giving seniors a fixed sum to use toward a private plan around the Federal Employee Health Benefits Plan that members of Congress use. But the formula to adjust Congress’ annual allowance is based on the average premiums charged by private plans, not general inflation. He should give Congress the same treatment that he is proposing for seniors to demonstrate his confidence—and build everyone else’s—that RyanCare would cut costs, not shirk its responsibility to seniors.

ObamaCare is the worst thing that could happen to seniors in their old age; inaction is the next and RyanCare is the least bad. As a senior in the making, if those were my only options, I would ignore Democratic demagoguery and take RyanCare in a heartbeat.

ObamaCare, however, I’d avoid like the plague.

Shikha Dalmia is a senior analyst at Reason Foundation and a columnist at The Daily, America's first iPad newspaper, where this column originally appeared.


Shikha Dalmia is Senior Analyst


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