Contrary to reports, Paul Ryan’s plan is revenue neutral when it comes to Medicare. That is right: While it changes the nature of Medicare for those under the age of 55, it contains no budgetary cuts:
The Romney-Ryan proposal — which has the support of liberal Democratic senator Ron Wyden of Oregon — would let senior citizens choose a coverage plan provided either by the federal government or by a private company. The government would defray the cost of purchasing the plan selected. The providers would submit bids showing the premiums they would charge to cover the benefits Medicare has traditionally offered. The second-lowest bid would set the amount the government would provide for each beneficiary.
Seniors who picked the second-cheapest provider would have their entire premium paid by the government, and seniors who picked the cheapest would get a check for the difference. Seniors who picked a more expensive plan would have to pay the difference out of pocket.
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 …
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.
Meanwhile, with Obamacare, President Obama signed into law $716 billion in Medicare cuts. This article in the Washington Post explains the details.
The Washington Post and liberal bloggers maintain that the Medicare cuts in Obamacare will not affect seniors because they are not cuts in benefits, but cuts in payments to hospitals and insurers. However, as seen with Medicaid, when you cut these payments, you do cut care. The money has to come from somewhere–private hospitals will not treat everyone for free, and insurers are businesses, not charities. Obama’s plan effectively limits care for the elderly by trying to impose government cost controls–cost controls which in the real world have never worked. As with Medicaid, government cost controls will inevitably cause health care providers to cut back services, offer less than optimal care, or eliminate care altogether for people under the program.
So who is shoving whom over a cliff?