The Return of Mediscare
The Editors @ National Review (August 13, 2012)
On CNN yesterday, Obama strategist David Axelrod claimed that “most of the experts who have looked at this” have said that Paul Ryan’s plan to reform Medicare would put the program “in a death spiral” and “would raise costs on seniors by thousands of dollars.” A day earlier — as Representative Ryan was preparing to accept Mitt Romney’s offer to join his ticket — Obama campaign manager Jim Messina had said the plan involved “shifting thousands of dollars in health-care costs to seniors.”
None of this is true. Any expert who looks at Ryan’s plan — any intelligent and fair-minded person, really — can tell you the actual worst-case scenario for how much more it could make beneficiaries pay: $0.
We have reason to be confident that this arrangement would restrain the growth of costs. A study has just shown that applying the second-cheapest-bidder approach to even the much less robust form of competition in Medicare Advantage would have resulted in a 9 percent reduction in Medicare costs in one year alone. The savings from years of real competition could be enormous.
If, however, competition does not restrain costs, the growth of government spending per beneficiary will be capped at a level a bit above the growth rate of the economy plus inflation. That is the exact level that the Obama administration envisions as well. The administration, however, hopes to reach the target by setting low prices for medical providers and otherwise micromanaging medical markets. There have been many past efforts along these lines, and they have always failed.
Under a worst-case scenario, then, the Romney-Ryan plan costs senior citizens no more than current law. It offers the hope of doing considerably better: of reining in the costs of Medicare, the principal cause of long-term debt disaster, without sacrificing patient choice, the quality of health care, or medical innovation.