Paul Ryan, Ron Wyden Introduce Bipartisan Medicare Reform Plan

Kevin Glass
Posted: Dec 15, 2011 9:41 AM
Rep. Paul Ryan (R.-Wisc.) and Sen. Ron Wyden (D-Ore.) teamed up to release a bipartisan Medicare reform program on Capitol Hill today. The proposal would combine Republicans' desire to introduce competition into the system with Democrats' hope to preserve traditional Medicare.

Sen. Wyden has in the past been a more flexible Democrat when it comes to health care policy. During the Obamacare debate, Ryan mentioned that if he had to vote on a Democrat plan, it was Wyden's. So it's no surprise that Ryan, the GOP's leading Congressional light on health care reform, has teamed up with Wyden today.

The details of Ryan-Wyden are mildly disappointing, especially Ryan's continued emphasis on ensuring the fiscal sustainability of federal government programs. Specifically, the fact that this plan would not only preserve traditional fee-for-service Medicare, but use it as a competitive baseline, is troubling. The outline notes that "Any private plan that wishes to participate in this new program must provide at least as comprehensive a benefit as traditional fee-for-service Medicare," when the comprehensiveness of FFS Medicare is precisely the problem when it comes to cost growth. Medicare at the moment is an open-ended promise from the government to pay for almost any manner of health costs for seniors. Ryan's previous efforts at reform - his Roadmap, the Ryan-Rivlin plan - acknowledged this and eliminated Medicare's open-ended nature.

If costs continue to spiral out of control, Ryan-Wyden would implement automatic cost controls:

"[B]eginning in 2023 there will be a cap on cost growth of 1 percent over Gross Domestic Product, plus inflation. Any increase over that cap will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums."

First, as Ben Domenech asks, why would the cost controls not kick in for another ten years? Second, as Avik Roy notes, GDP+1 is aggressive compared with the current path of Medicare cost growth, but not even as "aggressive" as Obamacare's IPAB cost controls!

Where this plan does work is on electoral politics. Democrats have been landing punches on Ryan's previous, more aggressive plan ever since it was released in April. And, for the most part, it was working. This allows Republicans to rally behind a more "moderate" plan that might be more acceptable to seniors worried that their health care is under threat. [Important caveat: the current structure of Medicare for seniors currently in the program was never under threat - but that didn't stop Democrats from demagoguery and scare-tactics.] It "keeps" traditional Medicare as an option while laying out realistic cost-control mechanisms. And they announced this morning that actual legislative language won't emerge until after the 2012 elections.

This is a plan that is a disappointment on policy compared with Ryan's previous efforts. However, it's something that is a little easier to swallow for GOP candidates and incumbents. Hopefully, this won't cut the legs out of some of Ryan's previous attempts at reform.