The Ryan Plan ‘Ends Medicare As We Know It’
After Mitt Romney announced he was picking Paul Ryan to be his vice presidential running mate, Obama campaign manager Jim Messina did not even wait until Ryan was done speaking before blasting out an email to reporters claiming:
His plan also would end Medicare as we know it by turning it into a voucher system, shifting thousands of dollars in health care costs to seniors.
This is just blatantly false. In fact, PolitiFact even named a statement just like this one it’s “Lie of the Year” for 2011. And that was the verdict on Ryan’s FY 2012 budget. The Medicare reforms in Ryan’s FY2013 Path to Prosperity budget are even more generous. As the American Enterprise Institute’s Andrew Biggs writes, there are three things every American should know about the most recent Ryan Medicare plan:
1. No one over the age of 55 would be affected in any way.
2. Traditional Medicare fee-for-service would remain available for all. “Premium support”—that is, government funding of private insurance plans chosen by individuals—is an option for those who choose it. No senior would be forced out of the traditional Medicare program against his will.
3. Overall funding for Medicare under the Ryan-Wyden plan is scheduled to grow at the same rate as under President Obama’s proposals. Is this “gutting Medicare” and “ending Medicare as we know it”? In reality, it’s the market giving seniors cheaper, higher quality choices they can take if they wish, with the traditional program remaining an option.
The “Wyden” in Biggs’ “Ryan-Wyden plan” refers to is Sen. Ron Wyden, D-Ore., a long-time progressive Democrat and health care reformer. Last December, Ryan reached across the aisle and got Wyden to co-author an op-ed in The Wall Street Journal in support of bringing a premium support option to Medicare. Wyden has since clarified that he does not support the rest of the Ryan budget (which includes a repeal of Obamacare and cuts to Medicaid), but he has not backed away from his acceptance of premium support as a viable option for the future of Medicare.
But if the Ryan and Obama plans spend the same amount of money on Medicare, then how are they different?
For starters, Obama takes the money he cuts from Medicare and uses it to fund brand new Obamacare entitlement spending. By contrast, Ryan takes his Medicare savings and uses them for debt reduction.
But the bigger difference between the two is how they reform Medicare. The Ryan plan uses the power of market competition to motivate providers to find ways to deliver health care more efficiently. Obama’s plan empowers a new government bureaucracy, the Independent Payment Advisory Board, to issue top down decrees on how providers must deliver health care. By law, IPAB can only propose cuts to health care providers, not beneficiaries. But when doctors don’t get paid they often don’t see patients.
In 2009, Medicare paid doctors about 80% if what private health insurance paid. According to a 2011 Centers for Medicare and Medicaid Services (CMS) report, under Obamacare that number is scheduled to decline to 57% by 2012. CMS writes:
In the Office of the Actuary‘s April 22, 2010 memorandum on the estimated financial effects of the Affordable Care Act, we noted that by 2019 the update reductions would result in negative total facility margins for about 15 percent of hospitals, skilled nursing facilities, and home health agencies. This estimated percentage would continue to increase, reaching roughly 25 percent in 2030 and 40 percent by 2050.
In other words, CMS projects that Obamacare’s cuts to doctors and hospitals will result in the bankruptcies of 40 percent of all health care providers by 2050. Try getting a doctor to see you then. Already The New York Times reports that 37 percent of New York City doctors won’t take new Medicare patients and a North Carolina study put the number at 50 percent.
If anything it is Obamacare that has ended Medicare as we know it.