Healing Medicare

December 17, 2011

IN THE MAELSTROM of dysfunction and partisanship better known as the 112th Congress, it is always surprising and gratifying when lawmakers from opposing parties manage to work together. That is particularly true when their collaboration involves an issue as politically charged and substantively complex as Medicare. So we begin by congratulating Sen. Ron Wyden (D-Ore.) and Rep. Paul Ryan (R-Wis.) for having the tenacity to try again, with a revamped version of Medicare reform unveiled last week.

Some will read the last sentence and chuckle knowingly about its seeming naivete. After all, Mr. Ryan’s more radical Medicare plan exposed him and his party to devastating attacks from Democrats who warned of “ending Medicare as we know it.” Is the new and much more improved model an effort to defang those attacks and use Mr. Wyden as political cover? Perhaps, but the unavoidable fact is that “Medicare as we know it” — with an exploding population of aging beneficiaries and inadequate controls on growth — cannot continue if the government is to perform the rest of its functions and avoid being saddled with ever more growth-inhibiting debt. Mr. Wyden and Mr. Ryan are under no illusions that their approach will be enacted anytime soon. But they deserve praise for trying to jump-start the conversation.

The essence of the Wyden-Ryan plan — and a similar proposal unveiled Friday by Alice Rivlin and Pete Domenici — involves a concept known as “premium support.” Rather than the current, open-ended entitlement, seniors and those with disabilities would be entitled to a benefit worth a fixed amount and could use it to buy insurance from private providers. There are major differences between Mr. Ryan’s old approach and the new version. First, beneficiaries who want to stick with traditional fee-for-service Medicare would be allowed to do so — although, if the costs of that program rise disproportionately, better-off seniors might have to pay higher premiums. Second, rather than limiting the growth of the government-provided benefit to inflation, which would have quickly made the amount inadequate to purchase reasonable coverage, the Wyden-Ryan plan would let the amount rise at the growth in gross domestic product per person plus 1 percent — a target already embedded in the new health-care law. Third, seniors would not be left to the vagaries of the market but would choose among competing plans in regulated exchanges like those in the new health-care law.

There are legitimate questions about the proposal, even if, as we have said, premium support is a promising part of the reform debate. Would sicker seniors flock to traditional Medicare, driving up its costs? Does requiring that private plans offer “actuarially equivalent” packages — rather than a set of specific benefits — guarantee seniors necessary care? Are poor seniors adequately protected? Would promised savings materialize?

Unfortunately, instead of welcoming the effort, the White House chose to stomp on it. Invoking a phrase used by Newt Gingrich during the 1990s, communications director Dan Pfeiffer warned that the “Wyden-Ryan scheme”could let traditional Medicare “wither on the vine,” hiking premiums and forcing seniors onto private plans. This is not a constructive or adequate response to a serious proposal.

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