Republican Vice Presidential pick Paul Ryan isn’t the only one Democrats are piling on this week. The knives have come out for Senator Ron Wyden, the Oregon Democrat.
I guess that isn’t a surprise. If Ron Wyden is right on Medicare then so are Paul Ryan and Mitt Romney.
The fundamental problem here is that the Democrats have decided that their best path to victory in the November elections is to say that the Republicans want to destroy Medicare as we know it and that the Democrats can preserve it.
The truth is that no one can preserve Medicare as we know it. There isn’t a prayer that your father’s Medicare will be around in 10 years. There is a legitimate policy debate going on about the direction we will have to go with it.
Showing posts with label Wyden-Ryan. Show all posts
Showing posts with label Wyden-Ryan. Show all posts
Monday, August 13, 2012
Sunday, February 26, 2012
"Five Myths About Medicare"
I recommend you read John Rother's recent op-ed in the Washington Post, "Five Myths About Medicare."
John argues that each of these statements is a myth:
John argues that each of these statements is a myth:
- Medicare is inefficient and fails to control costs--the CBO has projected that per capita spending will grow only 1% more than inflation over the next decade.
- The well-off don't pay enough for their Medicare benefits--working age premiums as well as Part B premiums already vary considerably by income.
- Medicare benefits are overly generous--in 2007 Medicare paid an average of only half of the $18,000 the average beneficiary spent.
- Cutting Medicare is the only way to save it--changing incentives to providers offers more promise.
- Medicare needs fundamental restructuring--"Even the most well-run and efficient program cannot nearly double its enrollment without a matching increase in money."
And this conclusion:
"Containing health-care cost growth is critical for Medicare’s survival, but it’s impossible to do that for Medicare alone. Payment restraints and incentives that improve value must be applied to the entire health-care system to be effective."
Wednesday, February 1, 2012
The Wyden-Ryan Plan Will Be the Foundation for Serious Medicare Reform—and Maybe More
In two companion articles in January’s New England Journal of Medicine, Henry Aaron with Austin Frakt, and Joe Antos critique the Wyden-Ryan Medicare reform proposal.
Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) are proposing a hybrid Medicare reform proposal combing both Republican defined contribution free market principles—a premium support scheme—with Democratic defined benefit principles—a baseline guaranteed plan and premium support.
In, “Now is Not the Time for Premium Support,” Aaron and Frakt argue that there is a market history of Medicare experimentation that hasn’t accomplished much and that a premium support scheme could well leave beneficiaries the victims of cost shifting:
Wyden-Ryan is now little more than a policy outline. It does fall short on real reform because it offers only a bare outline for how it will contain costs—there will be a still undefined fallback mechanism if costs exceed targets.
But what Wyden-Ryan does do is offer a political roadmap for how we could well see Medicare reform addressed after the election—particularly if Republicans gain control of the Congress.
Any successful reform has to achieve two things:
As I said in an earlier blog post:
Even if we faced a divided government in 2013, the imperative for entitlement reform makes addressing Medicare costs unavoidable. In that case a basis for ideological compromise will be necessary. Wyden-Ryan presents that opportunity.
It will be the next part of the plan that is still too vaguely defined—how costs would be controlled and beneficiaries therefore protected—that Wyden and Ryan must address. Both Antos and Aaron/Frakt are right in pointing that out.
How will we achieve the needed “scoreable” savings a future Congress can’t easily override and do it in a way that will be politically palatable in the first place? That is the big question. Wyden-Ryan is just an empty political box without answering that.
But do not underestimate how important this first bipartisan step is that Ron Wyden and Paul Ryan have taken. Unless the Democrats sweep the November elections, this is what the next debate will revolve around.
In fact, one can foresee this same bipartisan political formula as a means to eventually deal with the under-age-65 health insurance market. Remember Wyden-Bennett? Could there be another under-65 version of Wyden-Ryan?
Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) are proposing a hybrid Medicare reform proposal combing both Republican defined contribution free market principles—a premium support scheme—with Democratic defined benefit principles—a baseline guaranteed plan and premium support.
In, “Now is Not the Time for Premium Support,” Aaron and Frakt argue that there is a market history of Medicare experimentation that hasn’t accomplished much and that a premium support scheme could well leave beneficiaries the victims of cost shifting:
Advocates of premium support claim that Medicare Part D, which has a premium-support structure, shows that competition holds down spending and that beneficiaries make wise choices. Their claims are unjustified. Although Part D drug spending per enrollee is lower than was initially forecast, non-Medicare drug spending is even further below past projections. Furthermore, enrollees have, on average, chosen plans that exposed them to greater financial risk than the best options available to them. Most important, because Part D has no public option, it cannot provide evidence on whether private plans are better or worse than a government plan would be.Even the more pro-market Antos, in an article titled, “The Wyden-Ryan Proposal--A Foundation for Realistic Medicare Reform,” offers only limited praise for the plan:
So, although it's true that Medicare is a key driver of long-term federal spending, we don't believe that recently proposed premium-support reforms are the solution. They lack safeguards for beneficiaries. They threaten to shift costs to the elderly and disabled and force them to shop for coverage in a confusing insurance market. And the ability to run health exchanges for the Medicare population is currently in doubt.
Ryan and Wyden hint at the need for commonsense reforms to traditional Medicare, including a new structure of deductibles and copayments, a cap on catastrophic costs, and a new physician-payment system. They skirt the central problem: a disorganized fee-for-service system and top-down limits on prices paid for services drive the use of more, and more complicated, services. The program's survival depends on our willingness to make substantial changes over the next few years — before the major reform is implemented — so that traditional Medicare can provide cost-effective care without draining the Treasury.But then Antos suggests Wyden-Ryan could be the basis of real reform:
The current proposal also offers a more politically palatable fiscal target at the cost of achieving fewer “scoreable” savings. Under Ryan's earlier proposal, the federal subsidy would grow only with general inflation (1.5% in 2012, according to the CBO) instead of the more generous target of GDP plus 1% (a rate projected to total 4.8% in 2012). Not coincidentally, that is the same fiscal target established for the Independent Payment Advisory Board (IPAB) under the ACA.
A 3.3-percentage-point difference in fiscal targets translates to a 1-year increase in program spending of about $20 billion, or about $300 billion over 10 years. Adopting the weaker target means a substantial loss of budget savings, but only if Congress would actually enforce the stricter limits. That may be unlikely given recent history. Over the past 8 years, Congress has overridden even relatively small reductions in physician payments called for by the sustainable growth rate formula. Clearly, a favorable score from the CBO does not guarantee lower program spending.
Given the serious fiscal problems facing this country, slowing the growth of Medicare spending is no longer optional. The only question is how to do it. The Wyden–Ryan proposal outlines a strategy for Medicare reform that harnesses market forces to control costs. It provides a real alternative to the top-down controls favored in the ACA. Paul Ryan and Ron Wyden have defined the policy parameters that could be the basis for real Medicare reform in 2013.I will suggest that the last point is key.
Wyden-Ryan is now little more than a policy outline. It does fall short on real reform because it offers only a bare outline for how it will contain costs—there will be a still undefined fallback mechanism if costs exceed targets.
But what Wyden-Ryan does do is offer a political roadmap for how we could well see Medicare reform addressed after the election—particularly if Republicans gain control of the Congress.
Any successful reform has to achieve two things:
- It has to be politically feasible in the first place.
- Then it has to work—in this case it has to control costs and provide quality health care.
As I said in an earlier blog post:
What is elegant about the Wyden-Ryan compromise is that they have proposed a hybrid plan—it contains significant elements of both a Republican defined contribution and a Democratic defined benefit approach.Sooner or later all of this partisan bickering has to end. A Republican sweep in the November elections would do it. Wyden-Ryan would be on top of the health care agenda if that happened.
Republicans get an affordable cap on what the federal government would spend on Medicare—that growth would be no more than GDP+1%—and they would get a program built on a free market platform where consumers would have the incentive to maximize their premium support by shopping for the plan that best met their needs.
Democrats would get a plan that still contained the traditional government-run Medicare plan as one of the options and they would have a plan where all seniors were guaranteed a federal premium support level good enough to buy at least the two lowest cost Medicare plans available in their community—albeit maybe not the traditional Medicare option.
If there was ever a place for Republicans and Democrats to compromise on Medicare reform this is it. It is an elegant compromise—a hybrid—of both defined benefit and defined contribution principles.
Even if we faced a divided government in 2013, the imperative for entitlement reform makes addressing Medicare costs unavoidable. In that case a basis for ideological compromise will be necessary. Wyden-Ryan presents that opportunity.
It will be the next part of the plan that is still too vaguely defined—how costs would be controlled and beneficiaries therefore protected—that Wyden and Ryan must address. Both Antos and Aaron/Frakt are right in pointing that out.
How will we achieve the needed “scoreable” savings a future Congress can’t easily override and do it in a way that will be politically palatable in the first place? That is the big question. Wyden-Ryan is just an empty political box without answering that.
But do not underestimate how important this first bipartisan step is that Ron Wyden and Paul Ryan have taken. Unless the Democrats sweep the November elections, this is what the next debate will revolve around.
In fact, one can foresee this same bipartisan political formula as a means to eventually deal with the under-age-65 health insurance market. Remember Wyden-Bennett? Could there be another under-65 version of Wyden-Ryan?
Wednesday, December 14, 2011
Paul Ryan and Ron Wyden Blow the Medicare Reform Debate Wide Open!
House Budget Chair Paul Ryan (R-WI) and Senator Ron Wyden (D-OR) have embraced a Medicare reform plan that in concept borrows heavily from one championed by former New Mexico Senator Pete Domenici and former Clinton budget chief Alice Rivlin.
Specifically, Wyden and Ryan are proposing to alter the earlier Ryan Medicare plan by:
The Wyden-Ryan plan would begin in 2022.
Under Wyden-Ryan, if Medicare costs increased at a rate greater than the cap, the Congress would have to determine where to make reductions in spending—they could not directly cut senior benefits. Just what would force them to do that is unclear.
The new Wyden-Ryan Medicare policy proposals accomplish an elegant combination of key progressive and conservative health care reform principles. Their proposal also produces an enormous political bombshell on the eve of the 2012 elections.
Wyden and Ryan also propose to improve the under-age-65 employer health insurance market by allowing businesses with fewer than 100 workers to move to a defined-contribution model without tax penalties—something that is very similar to the earlier Wyden-Bennett health reform plan.
An Elegant Policy Compromise
Republicans have supported a defined contribution approach to Medicare reform. Already, House Republicans have voted in favor of the first Ryan proposal. That proposal would eliminate the traditional Medicare plan and replace it with a premium support system, or voucher, with which to buy from a range of private Medicare offerings. Any annual increase in the value of the premium support under the first Ryan plan would be capped at the rate of annual inflation as defined by the consumer price index—health care costs have consistently risen at much faster levels.
On this blog, I have been very critical of that proposal because it would shift all of the risk for the adequacy of any future federal premium support entirely onto the shoulders of seniors.
Democrats generally believe in the current Medicare plan, that seniors should be guaranteed a defined Medicare benefit and that the government pay a fixed portion of all Medicare costs as it does now—a defined benefit plan.
The problem is that the defined benefit Medicare plan we now have, and the government’s guarantee to pay most of its costs, is literally bankrupting the country.
So, something has to give.
What is elegant about the Wyden-Ryan compromise is that they have proposed a hybrid plan—it contains significant elements of both a Republican defined contribution and a Democratic defined benefit approach.
Republicans get an affordable cap on what the federal government would spend on Medicare—that growth would be no more than GDP+1%—and they would get a program built on a free market platform where consumers would have the incentive to maximize their premium support by shopping for the plan that best met their needs.
Democrats would get a plan that still contained the traditional government-run Medicare plan as one of the options and they would have a plan where all seniors were guaranteed a federal premium support level good enough to buy at least the two lowest cost Medicare plans available in their community—albeit maybe not the traditional Medicare option.
If there was ever a place for Republicans and Democrats to compromise on Medicare reform this is it. It is an elegant compromise—a hybrid—of both defined benefit and defined contribution principles.
The Political Bombshell
Frankly, the way Washington normally works, I would have expected this kind of compromise a year from now—after the 2012 elections.
But if an idea like this is ever going to make it into law, the right thing to do is to get it out there now so that the coming election debate over Medicare has all of the good ideas on the table.
Maybe a good sign is that both sides are claiming victory. Ezra Klein at the Washington Post says, "But the secret of these types of premium-support platforms is that they are, in essence, a vindication of the Affordable Care Act." The Wall Street Journal is out with an editorial on Thursday claiming the Wyden/Ryan proposal is a Republican victory “because it shows that the serious entitlement debate is taking place within the camp of choice and incentives, not the Obama status quo.” Nice try guys.
But politically, it is unavoidable to conclude that Ryan has given all of those Republicans in the House, who have already voted for his first Medicare plan, a severe case of heartburn—not to mention all of those Republican presidential candidates who have made the first Ryan Medicare plan a virtual litmus test for who really is a conservative Republican.
To say Ryan’s first Medicare plan was controversial and a huge political risk is a pretty big understatement. And, many Republicans, particularly in the House, unconditionally embraced it.
But, here is what Ryan said in Politico on Wednesday:
But what does that do for all of the House Republicans who stepped out on that risky Medicare limb for Ryan and now have to defend their vote on the eve of an election? A vote that would have “killed Medicare as we know it?” Or, those Republican presidential candidates who couldn’t wait to out do the other candidates with their zealous support of it?
Gingrich and Romney embraced the Ryan Medicare plan—albeit with the key modification that the Ryan plan should keep Medicare as one of the options. Smart on their part. But Ryan goes a lot further than that in his bipartisan proposal with Democrat Wyden by, among other things, increasing the rate at which premium supports—and therefore the federal entitlement—would increase and by creating a defined benefit Medicare floor in the new proposal as well as conceding consumer protections to Wyden (make that more regulation than most Republicans would like to see).
Democrats may now be mourning the loss of the first Ryan plan they thought was a big fat political target going into 2012. But, by coming on board with Wyden, Ryan has all but conceded his first proposal wasn’t politically acceptable. Democrats who said they would never alter the Medicare entitlement, an unrealistic promise in the face of the debt crisis, can't be happy a leading progressive has found a way to do it.
Democrats jumped all over Gingrich’s original rejection of the Ryan plan, when he called it “right wing social engineering.”
You have to believe they are now going to have a better time jumping on all those Republicans who voted for, or have unconditionally supported, that first Ryan plan now that that key parts of that idea have been abandoned by its author.
But that analysis focuses on the partisan politics that are sure to follow in this town.
I will suggest that this proposal represents something above all of that.
Who is the winner here?
Bipartisanship. This compromise carefully recognizes and balances important principles from both sides toward a solution to a major problem and I hope people who really want to fix things will appreciate that.
This is a good day for the country—and we haven’t had one in a while.
Specifically, Wyden and Ryan are proposing to alter the earlier Ryan Medicare plan by:
- Continuing to offer the traditional Medicare plan—Ryan would have eliminated it—in addition to a range of private Medicare plans offered by health insurers.
- Tying federal Medicare premium support to an amount equal to the second lowest cost Medicare plan—public or private—available to seniors in each market. Ryan would have set a flat premium support amount in year-one and increased that only at the rate of inflation.
- Instituting a series of consumer protections and medical underwriting rules designed to protect seniors.
- Instituting an annual cap on what the federal government could pay for Medicare at an amount equal to the increase in the nation’s GDP + 1%—Ryan would have capped annual increases in the federal premium support amount at the increase in the consumer price index.
The Wyden-Ryan plan would begin in 2022.
Under Wyden-Ryan, if Medicare costs increased at a rate greater than the cap, the Congress would have to determine where to make reductions in spending—they could not directly cut senior benefits. Just what would force them to do that is unclear.
The new Wyden-Ryan Medicare policy proposals accomplish an elegant combination of key progressive and conservative health care reform principles. Their proposal also produces an enormous political bombshell on the eve of the 2012 elections.
Wyden and Ryan also propose to improve the under-age-65 employer health insurance market by allowing businesses with fewer than 100 workers to move to a defined-contribution model without tax penalties—something that is very similar to the earlier Wyden-Bennett health reform plan.
An Elegant Policy Compromise
Republicans have supported a defined contribution approach to Medicare reform. Already, House Republicans have voted in favor of the first Ryan proposal. That proposal would eliminate the traditional Medicare plan and replace it with a premium support system, or voucher, with which to buy from a range of private Medicare offerings. Any annual increase in the value of the premium support under the first Ryan plan would be capped at the rate of annual inflation as defined by the consumer price index—health care costs have consistently risen at much faster levels.
On this blog, I have been very critical of that proposal because it would shift all of the risk for the adequacy of any future federal premium support entirely onto the shoulders of seniors.
Democrats generally believe in the current Medicare plan, that seniors should be guaranteed a defined Medicare benefit and that the government pay a fixed portion of all Medicare costs as it does now—a defined benefit plan.
The problem is that the defined benefit Medicare plan we now have, and the government’s guarantee to pay most of its costs, is literally bankrupting the country.
So, something has to give.
What is elegant about the Wyden-Ryan compromise is that they have proposed a hybrid plan—it contains significant elements of both a Republican defined contribution and a Democratic defined benefit approach.
Republicans get an affordable cap on what the federal government would spend on Medicare—that growth would be no more than GDP+1%—and they would get a program built on a free market platform where consumers would have the incentive to maximize their premium support by shopping for the plan that best met their needs.
Democrats would get a plan that still contained the traditional government-run Medicare plan as one of the options and they would have a plan where all seniors were guaranteed a federal premium support level good enough to buy at least the two lowest cost Medicare plans available in their community—albeit maybe not the traditional Medicare option.
If there was ever a place for Republicans and Democrats to compromise on Medicare reform this is it. It is an elegant compromise—a hybrid—of both defined benefit and defined contribution principles.
The Political Bombshell
Frankly, the way Washington normally works, I would have expected this kind of compromise a year from now—after the 2012 elections.
But if an idea like this is ever going to make it into law, the right thing to do is to get it out there now so that the coming election debate over Medicare has all of the good ideas on the table.
Maybe a good sign is that both sides are claiming victory. Ezra Klein at the Washington Post says, "But the secret of these types of premium-support platforms is that they are, in essence, a vindication of the Affordable Care Act." The Wall Street Journal is out with an editorial on Thursday claiming the Wyden/Ryan proposal is a Republican victory “because it shows that the serious entitlement debate is taking place within the camp of choice and incentives, not the Obama status quo.” Nice try guys.
But politically, it is unavoidable to conclude that Ryan has given all of those Republicans in the House, who have already voted for his first Medicare plan, a severe case of heartburn—not to mention all of those Republican presidential candidates who have made the first Ryan Medicare plan a virtual litmus test for who really is a conservative Republican.
To say Ryan’s first Medicare plan was controversial and a huge political risk is a pretty big understatement. And, many Republicans, particularly in the House, unconditionally embraced it.
But, here is what Ryan said in Politico on Wednesday:
“If you wait and allow the political paralysis to stop us from fixing and saving this program then you’re not going to be able to grandfather people. Then you’re not going to have severe disruptions in seniors lives that would just be, I think, morally wrong because we see this problem coming. What Ron and I are trying to do is to prepare the ground for a consensus to be accomplished as soon as the politics allow it to happen.”Can’t disagree with that logic—that bipartisan logic, in fact.
But what does that do for all of the House Republicans who stepped out on that risky Medicare limb for Ryan and now have to defend their vote on the eve of an election? A vote that would have “killed Medicare as we know it?” Or, those Republican presidential candidates who couldn’t wait to out do the other candidates with their zealous support of it?
Gingrich and Romney embraced the Ryan Medicare plan—albeit with the key modification that the Ryan plan should keep Medicare as one of the options. Smart on their part. But Ryan goes a lot further than that in his bipartisan proposal with Democrat Wyden by, among other things, increasing the rate at which premium supports—and therefore the federal entitlement—would increase and by creating a defined benefit Medicare floor in the new proposal as well as conceding consumer protections to Wyden (make that more regulation than most Republicans would like to see).
Democrats may now be mourning the loss of the first Ryan plan they thought was a big fat political target going into 2012. But, by coming on board with Wyden, Ryan has all but conceded his first proposal wasn’t politically acceptable. Democrats who said they would never alter the Medicare entitlement, an unrealistic promise in the face of the debt crisis, can't be happy a leading progressive has found a way to do it.
Democrats jumped all over Gingrich’s original rejection of the Ryan plan, when he called it “right wing social engineering.”
You have to believe they are now going to have a better time jumping on all those Republicans who voted for, or have unconditionally supported, that first Ryan plan now that that key parts of that idea have been abandoned by its author.
But that analysis focuses on the partisan politics that are sure to follow in this town.
I will suggest that this proposal represents something above all of that.
Who is the winner here?
Bipartisanship. This compromise carefully recognizes and balances important principles from both sides toward a solution to a major problem and I hope people who really want to fix things will appreciate that.
This is a good day for the country—and we haven’t had one in a while.
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