Bipartisan plan for premium-support reform of Medicare?

posted at 10:25 am on December 15, 2011 by Ed Morrissey

Democrats had to have a plan to tie all Republican candidates to that crazy notion floated by Paul Ryan to transform Medicare into a premium-support plan, an idea so radical that no Democrat or even sane person could possibly support.  Why, even Newt Gingrich called it “right-wing social engineering”!  Barack Obama could get up on the stump all year and tell seniors that only he could hold back the hordes of crazy Tea Party activists that would throw Grandma to the mercy of — quelle horreur — insurance companies.  Wait, I wrote that inaccurately.  It should have been eeeeeeeeeevil insurance companies.

Sounds like a great plan, no?  Well, at least it did until Democratic Senator Ron Wyden of Oregon decided that Paul’s idea isn’t so insane or extreme after all:

A Democratic senator, Ron Wyden of Oregon, and a Republican member of the House, Paul D. Ryan of Wisconsin, unveiled a bipartisan plan on Wednesday to revamp Medicare and make a fixed federal contribution to the cost of coverage for each beneficiary. …

Under the proposal, known as premium support, Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.

Congress would establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide benefits of the same or greater value. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.

In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one percentage point — a slower rate of increase than Medicare has historically experienced.

To stay under the limit, Congress could cut payments to providers and suppliers responsible for the overspending and could increase Medicare premiums for high-income beneficiaries, the lawmakers said.

That’s not too far off from Paul’s original proposal.  It would not affect current Medicare recipients, who would continue to operate under current Medicare coverage — although perhaps they might have an option to use the new system if they found it more to their liking.  Anyone not in Medicare now would be enrolled in what would be a more robust Medicare Advantage-type system, where the Medicare board creates an exchange of qualifying insurance plans from which enrollees can choose.  In this manner, Medicare costs become much more predictable and controllable, while spreading the risk to private risk pools instead of taxpayers.

But what does that do to ObamaCare and the strategy of demonizing Republicans on privatization?  The NYT admits that this is a tactical defeat, even at this stage:

In 2010, many Republicans won House seats — and the support of older voters — by arguing that President Obama’s health care law would damage Medicare. Democrats are hoping to retake the House by arguing that Mr. Ryan and other House Republicans are pushing for the privatization of Medicare, which they say could greatly increase costs for beneficiaries.

The new Wyden-Ryan proposal, by blurring the contrast between the parties on this issue, could make it more difficult for Democrats to win the argument.

You think?  If Wyden gets a few more Democrats to join the agreement — and there is no shortage of red-state Democrats looking to get re-elected this cycle and needing some bipartisan cover — the deal will make Obama look like the extremist, not Ryan and the Republicans.  It also eliminates the argument that the federal government needs to run all of the health-care industry as it does for seniors, since the eeeeeeeeeeevil  insurance companies can be trusted to provide for senior care after all.

Medicare is the single greatest threat to the fiscal health of the United States.  Congress has to act to reform it before it gets too late to avoid the debt crisis it will provoke.  This is the first inkling that Congress can actually act on this crisis, and if Obama tries to stamp it out in order to selfishly protect a political advantage, then we should make sure to headline it in screaming letters.


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