Without reform Medicare will go bankrupt. So, it is not a question of “if” Medicare will be cut but “how.” President Barack Obama’s approach is to simply gut Medicare’s funding and let the bureaucrats decide who does or doesn’t receive care. Vice presidential candidate Paul Ryan’s approach is to inject individual choice and competition into the program to provide more with less and to let patients, not bureaucrats, decide how to spend scarce resources. Ryan’s approach puts seniors first; Obama’s puts Washington bureaucrats first.
Obama has already cut $716 billion from Medicare to fund his new health care entitlement, and would cap Medicare growth going forward at the rate of GDP growth plus 0.5 percent. Those cuts will run into the trillions of dollars in the second decade under Obama’s program, and will be implemented principally by turning over control of health care decisions to bureaucrats who will be empowered to deny people the care they need.
The Ryan plan implements the same cap on overall Medicare spending, but achieves it by injecting individual choice and competition into the program, allowing patients to choose between traditional fee-for-service Medicare and competing private plans.
Obama’s plan – which has already been enacted – is a guaranteed disaster. If it had been Republicans who ignored public opinion and chose to gut Medicare to the tune of $716 billion over 10 years (and trillions more over 20 years) there would be no other issue in any federal election until that law got repealed. Democrats would be relentless and seniors would be up-in-arms. And understandably so, especially because about 10,000 baby boomers are now retiring every day.
Yet that was precisely what Obama’s health care law did to Medicare. The media is dutifully downplaying the significance of these devastating cuts but it’s actually worse than the headline number of $716 billion, up from about $500 billion already from when the president’s law passed. That’s because there is no credible cost-containment mechanism going forward to stay under the cap other than bureaucrats being empowered to deny seniors the care they need.
Most infamous of those bureaucratic denial-of-care mechanisms is the so-called Independent Payment Advisory Board (IPAB), a board of 15 bureaucrats who can set reimbursement rates and exclude particular treatments and cures from Medicare coverage altogether to bring overall Medicare spending in-line with the cap. And IPAB’s dictates cannot be overturned even by Congress unless it musters a supermajority, a constitutionally-questionable scheme to insulate IPAB from democratic accountability. Hospitals are protected from IPAB cuts until 2020, meaning the initial cuts will hit doctors and nursing homes even harder, forcing fewer and fewer to accept Medicare patients.
Ryan’s plan, on the other hand, would continue to provide benefit levels similar to what Medicare offers now, and achieve cost containment not through bureaucratic control but through individual choice and competition. Workers who are presently 55 or younger (there are no changes for current retirees or those near retirement, unlike Obama’s plan) would, when they qualify for Medicare, receive a benefit equal to the cost of traditional Medicare in the market in which they live. They would have the choice of using that benefit amount – known in this plan as “premium support” – to stay in traditional Medicare or opt instead for private plans that would be required to offer coverage that is no worse than the traditional program.
A group of Harvard researchers analyzed this plan, developed by Ryan with Democratic Senator Ron Wyden of Oregon, and found that if it had been in effect in 2009 it would have saved 9 percent with no reduction in care.
So the real question is not whether Medicare will be cut. It must be, will be, and already has been. The question is how it will be cut: bureaucratic denial-of-care or individual choice? Voters who understand what’s at stake will overwhelmingly favor the Ryan plan.
Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.
American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.
Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.
Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.
Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.
A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.