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Right Turn
Posted at 10:16 AM ET, 12/15/2011

Paul Ryan-Ron Wyden: Bipartisan Medicare reform

In an extraordinary policy and political breakthrough, Rep. Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) announced a bipartisan reform deal. In doing so, they eviscerated the Democrats’ Medicare gambit, undermined President Obama complaints that progress is impossible with Republicans in Congress and gave Mitt Romney a huge political shot in the arm.

The Post reports: “ Working with Democratic Sen. Ron Wyden (Ore.), the Wisconsin Republican is developing a framework that would offer traditional, government-run Medicare as an option for future retirees along with a variety of private plans.”

In a press release, the duo explained the key elements of the bill:

No changes for those in or near retirement. Americans currently over the age of 55 would see no changes to the structure of their benefits, although they would be free to opt into a private plan once the new Medicare Exchange was established in 2022.
More choices for seniors, including a traditional Medicare plan: Starting in 2022, Medicare would begin offering seniors a choice among Medicare-approved private plans competing alongside a traditional Medicare plan on a Medicare Exchange.
Premium support ensures affordable coverage: The plan would introduce a “premium support” system that would empower seniors to choose either a traditional Medicare plan or a Medicare-approved private plan.
More help for those who need it: Low-income seniors who qualify for Medicaid would continue to have Medicaid pay for their out-of-pocket expenses, while other low-income seniors who do not qualify for Medicaid would receive fully funded savings accounts to help offset any increased out-of-pocket costs.
Less help for those who don’t: Wealthier seniors who need help least would see their assistance reduced.
Strong consumer protections to safeguard the Medicare guarantee: This reformed Medicare program would include some of the toughest consumer protections in American government:
All health plans that participate in the Medicare Exchange would be required to offer benefits that are at least the actuarial equivalent of those provided by the traditional Medicare plan.
Premium-support payments would be risk-adjusted to ensure that those with greater health needs are guaranteed affordable coverage.
Participating plans cannot refuse coverage based on pre-existing conditions, nor can they charge discriminatory rates based on health status. . . .
Transparency, Competition Work as Powerful Cost Controls: Program growth would be determined by the competitive bidding process — with transparency, choice and competition forcing providers to reduce costs and improve quality for seniors. . . .
Cap on Growth Serves as a Backstop: However, exceeding the cap would not trigger across-the-board bureaucratic cuts or higher premiums. Instead, Congress would be forced to do its job: Determine why the costs exceeded the cap and fix the problem.

If this sounds a lot like Mitt Romney’s proposed Medicare plan, it is. Yuval Levin wrote that the “Ryan-Wyden idea seems to be roughly the same as the one proposed by Mitt Romney last month, and advocated by champions of premium-support (including Ryan, but until today not Wyden) since at least the Breaux-Thomas commission of the late 1990s.”

In their press release, Ryan and Wyden also cast a wider net for health-care reform, offering a hint of what might be a bipartisan replacement for Obamacare. They argued, “Just as Medicare reform would give seniors more power to choose, reform is needed to free small businesses and individuals from restrictions that inhibit choice and control in health coverage.” They suggested a few ideas:

Any small business with up to 100 workers would be able to offer its employees a free choice option so that they could use the amount that their employer contributes toward their health coverage to purchase their own health insurance.
The cost of the free choice option would be fully tax deductible to the employer, just like employer-provided health coverage.
Allowing individuals to keep one insurance product as they transition from their working years into retirement would ease seniors’ transition into Medicare while giving small businesses and their workers more choices and freedom.

But the bulk of the proposal is focused on Medicare. The measure certainly injects some free-market elements in Medicare, Levin explains:

The government would define the minimum insurance benefit it would seek to provide to all covered seniors, based on the level of coverage Medicare now provides, and then there would be a process each year in which the competing insurers would offer bids proposing to provide that (or a greater) benefit at the lowest cost they could. The level of the premium-support payment would be set at the level of the second-lowest of the bids. Seniors would then be able to apply that amount toward the purchase of any of the plans on offer. Thus, there would be at least one option that would cost less than the premium-support benefit, and seniors choosing that option would get the difference back; there would be at least one plan that cost the same as the benefit, so that seniors could obtain it with only the same out-of-pocket costs they have today; and there would be other plans that cost more (perhaps because they offered more, or because they failed to find ways to drive greater efficiency in their networks of doctors and hospitals) and for which seniors would pay an additional premium if they chose. Poorer and sicker seniors would get additional help, while the wealthiest seniors would get less.

As a political matter, the Mediscare crowd will be glum. The plan is quite obviously an attempt to preserve Medicare and to have the rich pay more. In the context of the GOP presidential primary, it is a big win for Romney (and some sweet revenge for Ryan, who’s been savaged by Gingrich). The Romney camp was gleeful. Spokeswoman Andrea Saul released a statement this morning: “We are very pleased to see that Congressman Ryan has introduced a Medicare reform proposal that aligns so closely with what Governor Romney proposed last month. This bipartisan plan proves once again that Governor Romney has thoughtful, workable solutions to the looming entitlement crisis. It also underscores the absurdity of Speaker Gingrich’s repeated attempts to throw a serious reformer like Paul Ryan under the bus by calling his ideas ‘social engineering’ and ‘suicide.’ ” And, gosh, it was released just in time for the final debate.

Aside from the politics, this suggests that when you leave the White House and its minions in Congress out of the mix, thoughtful Republicans and Democrats can craft sensible and bipartisan solutions to our long-term fiscal problems. That is something everyone should celebrate.

By  |  10:16 AM ET, 12/15/2011

 
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