How Rep. Ryan’s Reintroduced Medicare Proposal Could Drive Up Health Care Costs For Seniors

Later this month, House Budget Chairman Paul Ryan (R) will release his proposed budget, likely including his plan with Rep. Ron Wyden (D-OR) to transform Medicare. But while some see the revamped plan, which Mitt Romney has embraced, as an improvement over Ryan’s previous plan to privatize Medicare, critics argue the changes could be too drastic. As Kaiser Health News explains, promising future beneficiaries that they could also choose a program like Medicare could drive up health care costs even more:

“The real question is what it would cost,” and whether seniors would pay more out of pocket than they do now, said Jonathan Gruber, an economist at the Massachusetts Institute of Technology. He cited the risk the government-run plan would attract the sickest people, driving up its costs, while private plans lure the healthiest. In addition, medical providers could abandon the program if Medicare cuts their rates to curb costs. [...]

Still unanswered, though, is whether the traditional program guaranteed in the GOP proposals would look anything like it does today.

The Romney and Ryan-Wyden plans would replace the current guaranteed benefits with a subsidy, paired with a minimum set of benefits. Federal spending would be capped, with beneficiaries expected to be on the hook for additional expenses – exactly how much is unclear since neither Romney, nor Ryan and Wyden have provided many details.

Republicans “want to be able to say they’re not eliminating the traditional program as we know it. But a lot of experts are saying, ‘Yes you are, by design,’” said Chris Jennings, a health care consultant and former senior health care adviser to President Bill Clinton. “If the policy works as constructed, seniors who wish to stay in fee-for-service will pay more. Moreover, having [fewer] beneficiaries in the traditional program could diminish its bargaining leverage to contain cost growth.”

Along with Romney, Newt Gingrich has also embraced a plan like Ryan’s proposal that keeps traditional Medicare in place; Rick Santorum favors abolishing the program. The outcome of the budget fight will likely influence the GOP presidential conversation about health care, but ahead of that debate, polls still show that Democrats have the upper hand. According to the Kaiser Family Foundation, more people — including 53 percent of Republicans — agree with the Democrats’ position that preserves a defined set of benefits for Medicare rather than a “defined contribution” structure.