Paul Ryan’s Medicare Reform Falls Short

The Medicare part of Paul Ryan’s budget proposal, Path to Prosperity, is superior to the status quo, or anything proposed by President Obama. Unfortunately, it falls short of the high standard he set himself last year, in Roadmap for America’s Future.

The Roadmap contained a very precise Medicare “payment” (in Mr. Ryan’s words) of $11,000, to be adjusted for future inflation by a factor combining changes in the Consumer Price Index and changes in medical prices, for future Medicare beneficiaries who are now under 55 years of age. Path to Prosperity, however, eliminates the “payment” in favor of the woolier “premium support.” Nor does it even report how it would calculate this premium support, beyond asserting that “wealthier beneficiaries would receive a lower subsidy” (p. 46).

Under the previous Roadmap, you could have taken the “payment” and used it to “to pay for one of the Medicare certified plans, or any other plan, such as those offered by former employers or available from the private market” (p. 51).  In other words, you had the freedom to buy a Medicare Advantage plan, or to pay your employer for a retiree health plan, or buy an individual plan regulated by your state’s Insurance Commissioner.

Not any more: Under the current proposal, we’d be forced to choose a plan from a federal “tightly regulated exchange” (p. 47). We need to put this talk of “exchanges” to bed until we finally get rid of ObamaCare.  People rightly associate an exchange with a limited choice of plans selected by a politically appointed board, offering benefits determined by bureaucrats’ whims.  This is what motivates those who are currently blocking states from implementing ObamaCare’s Health Benefits Exchanges, or preventing Dr. Donald Berwick — an outspoken champion of medical rationing as practiced by Britain’s National Health Services — from taking over the Centers for Medicare & Medicaid Services.

Comments (15)

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  1. Ken says:

    Too critical. I think Ryan has done a major service.

  2. Greg says:

    It may fall short on the mechanics of reform, John, but it goes way beyond the original proposal in cutting spending. That’s why Alice Rivlin bailed out of this most recent proposal.

  3. Tom H. says:

    I think I agree with Greg.

  4. Nancy says:

    At least he’s out there leading the charge. He’s on the right side.

  5. I agree with you all, but someone from our side has to keep the bar high!

    The Wall Street Journal editorialized yesterday that Ryan “moderated his ambitions” because “reforms of this order are so unusual,” and that Ryan’s Medicare would look a lot like Medicare Advantage.

    Ryan would have saved himself the grief I dealt him if his proposed budget had used the term “Medicare Advantage” instead of federal “tightly regulated exchanges,” which smacks of Obamacare.

    Medicare Advantage is a popular alternative to traditional Medicare, whereby seniors can choose Medicare through a private plan, which does not have to pay providers according to the government’s Soviet-style fixed-price schedule.

    Obamacare will drive about a half of participating seniors out of the program, as I discussed in a study of the costs and benefits of Medicare Advantage (, so Republicans should be able to leverage this to their advantage in both the fight against Obamacare and for Medicare reform.

    (In the study noted above, I describe a way to combine the best features of Medicare Advantage and Medigap to approach a market of real choice for Medicare beneficiaries.)

  6. Erik says:

    I see the NCPA is pulling for the insurance companies to maintain their 13% “advantage” with medicare advantage plans. How does subsidizing insurance companies lower the budget?

  7. Fritz says:

    I think John has it right. Ryan may be ‘on the right side,’ and is ‘leading the charge,’ but his plan fall short in a number of ways that need to be identified. This is no time to get in lock-step behind a plan that is only better than the unacceptible!.

  8. Virginia says:

    I think Ryan’s going on a huge political limb to make these cuts. I say: do as much as you can now, and fight for more later. Ryan is doing the right thing.

  9. Stephen C. says:

    Erik, can you point to any post at this site where anyone has said he wants insurance companies to make more money? Not just 13%. Any percent?

  10. Jeff says:

    Even if there are faults, Ryan is sill doing the Lord’s work.

  11. Frank Timmins says:

    Ryan’s proposal is a great start, and pretty much unprecedented by an actual elected representative. We need to support him strongly. On the other hand the Johns (Goodman and Graham)are right. There is a big difference in making funds available for personal options vs. paying the premium for people for your “in house” program. Along the same lines, why even use terms that were created for use in government run programs such as “Exchanges”. Be a bit creative and think of a new phrase or two to separate from the Leftists.

  12. Erik says:

    The NCPA is a supporter of Medicare Advantage plans so they accept the fact that it has a 13% premium advantage created through legislation when it supports their worldview.

    Again how does premium support lower medical costs?

    All the Ryan plan does is redistribute pre-paid middle class health care and retirement dollars to the upper 2% and corporations through a tax reduction. The CBO says Ryan’s plan will add to the budget.

  13. Mr. Timmins: You are hinting at a bigger problem for Ryan & Republicans than I think most people appreciate. Look at today’s USA Today for head-to-head editorials by Ed Haislmaier of Heritage Foundation and USA Today editorial board (

    As USA Today editorialists put it (although not as succinctly as I will here): How can conservatives state that means-tested & heavily subsidized exchanges are awful for working-age people but the greatest thing since sliced bread for Medicare beneficiaries? Don’t they think Obama will figure this out and campaign in 2012 with something like this: “The health reform creates exchanges where people can choose their own health plans, and lower-income folks will get more help – just like Paul Ryan proposed for Medicare!”

    I can’t see how ordinary voters are going to waste time trying to figure out the difference between an Obamacare exchange and Ryan or Heritage Foundation exchange.

  14. dennis says:

    must people making less than 400% of federal proverty level would be better off with the subsies in the health care law than to be on medicare. which sounds like what ryan is wanting to do.

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