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A compromise on Medicare

Gregory Warner Dec 15, 2011

Kai Ryssdal: Here are some words we haven’t used to describe the happenings in Washington lately. ‘Bipartisan’ and ‘compromise.’

But that’s what we seem to have in at least one area. Republican Congressman Paul Ryan and Democratic Senator Ron Wyden said today they have — here it is again — a bipartisan plan to overhaul Medicare. They said in a statement they hope this will be the start of — their words here — “a serious debate in Washington on how to reform the country’s biggest entitlement program.”

From our Health Desk at WHYY in Philadelphia, Gregory Warner reports.

Gregory Warner: Here’s the compromise. Seniors get a voucher to use toward insurance on the private market as Republicans want, or toward traditional Medicare, which Democrats want to preserve. Wealthier seniors — whatever that means — get a smaller voucher. They contribute more of their own money. Low-income seniors — again, to be determined — get more subsidies.

Robert Laszewski is a health care consultant in Washington.

Robert Laszewski: It does create a market where seniors have choices and have a fixed amount of money to go out and shop for health care. I think it’s really an elegant compromise.

As for cost control? Spending would be capped at the growth rate of the U.S. economy plus 1 percent.

Laszewski: Medicare over the last 25 years has grown at GDP plus 3 percent. So, if we can control spending at GDP plus 1 percent, that’s something we can afford.

Then you dig in the details of the proposal, and — wait, there aren’t any details.

Joe Antos: This 12-page document doesn’t say a lot about how they’re going to save money.

Joe Antos covers health policy for the American Enterprise Institute. He says it’s implied that Medicare will cut costs to compete with private plans.

Antos: Presumably, if traditional Medicare is going survive in competitive markets, it’s going to change the way it operates.

Which means:

Antos: Higher premiums or higher cost sharing or tighter access to preferred providers.

And this is where the whole compromise thing could break down. Democrats don’t want those restrictions on access, and they don’t believe that the private insurance market is cheaper. And what happens if spending does go over the magic cap of GDP plus 1 percent?

Paul Ginsburg is at the Center for Studying Health System Change. He says the proposal is quiet about that, too.

Paul Ginsburg: They’re not saying, ‘oh the providers will pay’ or ‘the beneficiaries will pay.’ They’re really just leaving it up to Congress to deal with it in the future.

And those are words we have heard before.

In Philadelphia, I’m Gregory Warner for Marketplace.

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