Rick Santorum promised to expedite the implementation of Rep. Paul Ryan’s (R-WI) Medicare privatization plan during a town hall in Northfield, New Hampshire this afternoon, saying that today’s seniors should receive a premium support subsidy to purchase coverage from private insurers. Ryan’s original budget proposal — which most House Republican supported — exempts current enrollees and doesn’t kick in until 2022. In that year, people turning 65 will receive a pre-determined “premium support” payment to purchase private insurance. But since the government’s contribution would be indexed to inflation and fall behind actual health care costs, by 2030 the proposal would “only cover 32 percent of a typical 65-year-old’s total health care spending.”
Proponents of the plan argue that opening up Medicare to greater private competition would ultimately lower health care costs, but today Santorum admitted that if the GOP’s “trust” in insurers’ ability to lower spending is misplaced, seniors will be forced to spend more on health insurance:
SANTORUM: In Medicare, we’re saying, trust the private sector to drive down costs and it’s a belief that that will happen. And if it doesn’t of course seniors will have to participate more in the increasing cost of health care. So there is a downside, I freely admit that.
In fact, there is very little evidence to suggest that private plans have or can do a better job of lowering spending. Medicare’s sheer size and bargaining clout have contributed to itsgreater success in controlling health care costs and have allowed it to introduce market innovations and payment reforms that were later adopted by private industry. Here is the per-beneficiary comparison:
As Paul Krugman points out, “if Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper.”