Paul Ryan to announce new approach to preserving Medicare


House Budget Committee Chairman Paul Ryan is set to unveil a new approach that would preserve the 46-year-old federal health program in its current form. (Joshua Roberts/BLOOMBERG)

House Budget Committee Chairman Paul Ryan, who has been castigated by Democrats and hailed by Republicans for his plan to privatize Medicare, will on Thursday unveil a new approach that would preserve the 46-year-old federal health program.

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.

Seniors would still receive a set amount of money from the government to buy insurance, as they would under the Medicare proposal Ryan included in the budget blueprint that passed the House last year. But the new approach would let that subsidy, known as premium support, rise or fall along with the actual cost of the policies — creating more protection for seniors and saving potentially far less in the budget.

Wyden is the first elected Democrat to publicly endorse Ryan’s premium support plan, and their unusual alliance could complicate election-year politics for both parties on an explosive issue. In recent days, Republican presidential candidate Mitt Romney has embraced the Ryan privatization plan, and GOP front-runner Newt Gingrich has offered qualified support. Democrats, meanwhile, have been gearing up to challenge the GOP across the board on the issue, accusing Republicans of pushing to “end the Medicare guarantee.”

Ryan and Wyden said in an interview Tuesday that they joined forces in hopes of lifting the Medicare debate above the divisive political rhetoric and forging a genuine compromise that could save the program along with the government’s solvency. Since unveiling his premium support plan last spring, Ryan has been working with Democrats to modify the idea to build bipartisan support.

“We want to demonstrate that there is an emerging consensus developing on how to preserve Medicare. We want to move that consensus forward,” Ryan said. “This program’s got to be reformed to be saved. The country’s at stake.”

Wyden said that adding traditional Medicare to Ryan’s premium support plan combines the best ideas of both parties, creating “the opportunity for progressives and conservatives to come together and address the real challenges” of the federal entitlement program: rising health costs and an aging population.

“There’s a lot to work with here in terms of trying to find common ground,” Wyden said. “This doesn’t end Medicare as we know it. People can go to bed knowing that traditional Medicare will be there for them for all time.”

The pair said they would not draft legislation. With Congress at an impasse over more immediate deadline matters, such as the extension of a temporary payroll tax cut, Ryan said he does not expect action on major issues such as Medicare until a new Congress is seated in 2013.

“There’s no point in drafting legislation if you know it’s not going to pass,” Ryan said.

Ryan and Wyden, a longtime advocate for seniors, plan to release their proposal at a breakfast Thursday morning hosted by the Bipartisan Policy Center, one of many players in the year-long debate over the national debt. The center formed its own debt-reduction committee, chaired by former senator Pete Domenici (R-N.M.) and former Clinton budget director Alice Rivlin, who has also worked with Ryan on his premium support approach to Medicare.

The avenue Ryan and Wyden have chosen, which would take effect for new retirees beginning in 2022, closely parallels that advocated by Rivlin. It would not only preserve Medicare but would add catastrophic coverage with a cap on out-of-pocket costs.

And where Ryan’s initial plan would have tied the amount of the government subsidy to inflation — regardless of the cost of the policies — he and Wyden adopted Rivlin’s recommendation to let the subsidies grow slightly faster than the overall economy. That’s the same standard for Medicare spending set last year by President Obama’s health legislation.

Ryan and Wyden acknowledged that their plan might not bring in more savings than under the current law. But they said that by forcing private insurers to bid to provide Medicare coverage and encouraging beneficiaries to choose the plan with the lowest costs, the measure could drive costs down lower than the price controls that the current law would impose on the private sector. If costs continued to rise nonetheless, beneficiaries would not have to bear the burden, the lawmakers said; Congress would be required to take further action.

In a paper to be presented Thursday, the lawmakers stressed their commitment to providing government health coverage for people older than 65 — a stark contrast to the views of some in the GOP presidential field who have questioned the constitutionality of the federal entitlement.

“As representatives of hard-working Americans in Oregon and Southern Wisconsin, we realize our absolute responsibility to preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s seniors for decades to come,” the lawmakers wrote. “We are two Members of Congress who firmly believe in the iron-clad guarantee of the Medicare program, and this belief has informed our understanding of the unacceptable risk to our seniors’ health and retirement security if we do not come together as a country and take action to save and strengthen Medicare,” they said.

The plan also makes no mention of the Affordable Care Act, Obama’s signature health-care legislation, which Ryan and other Republicans have vowed to repeal.

“We’re basically saying we’re not going to debate the ACA,” Wyden said. “That will drive everybody off into their corners.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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