Hoping to take the sting out of his proposal to radically change Medicare, Paul Ryan released a video Wednesday morning explaining his plan with the help of some visual aids. Ryan is in desperate need of new messaging after a Democrat prevailed in special election to represent New York’s 26th district. The election was largely a referendum on the budget written by Ryan, chairman of the House budget committee.
Here’s Ryan in shirtsleeves, channeling Austen Goolsbee, and trying to explain the logic of his proposal to voucherize Medicare:
Ryan begins his short program with a review of the health care cost crisis and fee-for-service Medicare. He says Medicare is unsustainable because seniors are disconnected from prices and there’s no competition. These things are true, but blaming Medicare’s rising costs on these factors alone isn’t honest. There is a degree of competition in Medicare – it’s called Medicare Advantage, the program in which private insurers compete to cover Medicare recipients who can choose these plans instead of traditional Medicare. It has done nothing to stem rising Medicare costs. In addition, health care costs are rising just as fast – if not faster – outside of Medicare, in the private insurance market where there is plenty of competition and more consumers are attuned to price.
Despite all of this, it’s tempting to admire Ryan’s attempt to use clear-headed logic to explain why Medicare reform is necessary. Where he falls short in this video, though, is in his explanation of his own plan. He spends three and a half minutes explaining the health care system and pitfalls of the Affordable Care Act and only one minute explaining his plan, which he’s not specific about. He doesn’t come out and say that the reason it saves money is that the government would spend far less on health care for seniors in the future. Ryan seems to be betting that his lower cost plan won’t sacrifice seniors’ health care because competition and free market principles will automatically make that care cheaper. But that’s simply not true. There’s no way to achieve the savings Ryan lays out just by letting the market take over. About 50% of American health care spending is now controlled by the private sector and prices on that side of the system are spinning out of control just as fast as Medicare.
I’m very skeptical Ryan is going to be able to reform his message about Medicare changes. He’s going to face the problems Obama and the Democrats did selling their health care plan. And as much as Ryan tries to convince the public that Medicare is broken – unsustainable cost increases, poor quality care, lack of choice – the public is not going to buy it. Medicare is massively popular and, until that changes, Ryan is pushing a boulder up a steep hill.
Washington has not been honest with you about Medicare. Medicare is a critical program which helps seniors achieve health security. But the truth is it’s headed for a painful collapse.
We can save Medicare, but we have to reform it so that it delivers the high quality we expect, at a price we can afford.
Let’s take a look at: what’s going on now; why it’s happening; and how we can save and strengthen this program.
The average American household spends nearly 50 times more on health care today than it spent in 1960. This translates into health care costs of more than $25,000 per US family, every year.
As a result, health care spending has gone from consuming just five percent of our economy to nearly one-fifth of our entire economy today.
While a lot needs fixing in health care, independent experts agree Medicare is a top driver of these unsustainable costs. If we do nothing, Medicare spending will nearly double over the next decade, exhausting its remaining funds.
Here’s why: More than 75 percent of Medicare recipients, which is 35 million people, receive what’s called the fee-for-service insurance plan.
Here’s how it works: A Medicare patient goes to the doctor and receives health care services. The doctor sends the bill for these services to Medicare, and Medicare reimburses the doctor — with your tax dollars and borrowed money — no questions asked.
This system increases costs and decreases quality for two reasons:
First, as you can see, the patient is very disconnected from the cost. We all pay for Medicare, through taxes or, if you’re a Medicare patient, through premiums. But the true cost is hidden from the Medicare patient because someone else pays the actual bill. When we pay directly for something, and we know how much it costs, we have a strong incentive to demand the best value. In health care, we don’t.
The second reason costs are going up and quality is going down is that fee-for-service Medicare insurance has no competition — so it reimburses all doctors and hospitals the same, even if the quality of the care they provide is poor, and the cost of their care is high. Meaning that there is little financial incentive for doctors and hospitals to deliver the best care at the lowest price.
Many experts agree that this leads to rising costs but the disagreement is over what to do about it.
The President’s plan is to let a panel of 15 unelected, unaccountable bureaucrats decide how much, or how little, Medicare will pay doctors and which services Medicare will, or will not, pay doctors to provide for their patients.
These are price controls, and we’ve tried them before. They encourage more consumption, and they force doctors to charge their non-Medicare patients more. That pushes costs up, not down.
If we keep going down this path, many doctors will stop seeing Medicare patients altogether restricting access to health care for seniors, and leading to waiting lists and denied care.
How We Can Save Medicare
There is another, better approach. The House-passed budget – The Path to Prosperity – saves Medicare for current seniors and strengthens it for future generations.
Those in or near retirement should not be forced to reorganize their lives because of government’s mistakes. That’s why our budget ensures no changes for those 55 years old or older. But for current taxpayers and future generations, we need real reform.
Rather than putting the government in charge, our plan provides financial support to help future Medicare patients pay for the insurance plan that works best for them and their families.
Patients will have the freedom to choose from a list of guaranteed coverage options – the same kind of system members of Congress enjoy today.
And insurance providers, competing for patients’ business, will look to lower the costs and increase quality for their services – the way it always works when the consumer is in charge.
Our plan also ensures lower-income seniors and those with greater health care risks will receive greater support, while wealthy seniors receive less.
The urgent need to reform Medicare and the President’s misguided approach have left us with a serious question to ask: Who should be making health-care decisions for you and your family?
A government monopoly and a panel of bureaucrats in Washington DC?