The political left is conniving to make the case that Republican vice presidential nominee Paul Ryan’s Medicare reform plan—which he co-sponsored with liberal Democratic Senator Ron Wyden (Oregon) and an earlier outline with liberal Democratic economist Alice Rivlin—is a radical departure from the current Medicare system that will hurt seniors. Don’t you believe it, and here’s why:
1. It is not a new idea. Ryan’s plan is called a “premium support” model; the government gives a health plan a set amount of money, and the plan provides comprehensive coverage. A version of this model known as Medicare+Choice was first passed by Congress in 1997, and an improved version passed in 2003 under the name Medicare Advantage.
2. It’s popular. Currently, 26 percent of seniors voluntarily choose a Medicare Advantage plan over traditional Medicare. Under Ryan’s most recent proposal, Medicare beneficiaries can choose either a Medicare Advantage-type plan or stay in traditional Medicare.
3. Low-income seniors and minorities participate. A new study from America’s Health Insurance Plans (AHIP) shows that 64 percent of African American and 82 percent of Hispanic Medicare Advantage participants had incomes under $20,000.
4. It grows at the same rate as ObamaCare. Critics will claim that Ryan’s plan hurts seniors because it eventually caps the premium support at the growth of GDP plus 0.5 percent. But that is exactly the same rate imposed by ObamaCare. The difference is that ObamaCare tries to keep the lid on growth by regulating from the top-down; the Ryan plan tries to keep the lid on growth by creating the right economic incentives.
5. It gets the economic incentives right. By providing a set amount of money for each Medicare beneficiary’s health care coverage, the Ryan plan starts a process of encouraging seniors to ask where they get the best value for their health care dollar—just as we all do in every other sector of the economy. That change will create a new dynamic in Medicare that will increase competition, lower costs and improve quality—the missing links to preserving and strengthening Medicare.
Merrill Matthews, Ph.D., is a resident scholar with the Institute for Policy Innovation, a research-based, public policy “think tank.” He is a health policy expert and weekly contributor at Forbes.com. He also serves as Chair of the Texas Advisory Committee of the U.S. Commission on Civil Rights.
Read more from Merrill Matthews at www.ipi.org