The Corner

The Ryan Plan Doesn’t Privatize Medicare

This morning at 6:15 a.m., I was driving to Union Station to catch a train to New York when I heard an NPR analyst describe Chairman Ryan’s budget plan as effectively a reform to privatize Medicare. It’s not. Privatization of Medicare would mean government getting out of the business of providing health care. In this case, Medicare is saved and the government continues to contribute large amounts of money towards seniors’ health-care premiums by paying a fixed amount of money to the insurance provider. Everyone above 65 will benefit from this premium support.

This is Ryan in the Wall Street Journal today:

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.

In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.

That’s not privatization. In fact, while this reform is a great start, the plan continues the Washington tradition of extending open-ended promises on Medicare without paying for them (even though the cost is much lower). Also, this may be nitpicking on my part, but under this plan consumers will still be bound to a list of guaranteed coverage options chosen by the government.

Update: Reason’s Peter Suderman challenges me on the idea that Ryan’s plan isn’t privatization. He writes:

Ryan’s plan replaces government-run, single-payer Medicare with vouchers/premium support that can be used to purchase from private insurers, right?

So his plan 1) gets rid of the government-run Medicare payer infrastructure and 2) puts in place a system of private, competing insurers. Unless I am mistaken. 

That sounds like a form of privatization to me. 

Sure, it doesn’t end federal involvement in seniors health insurance. But ending federal involvement would be more than privatization — it would be shutting down the entire Medicare system. 

(Yes, I know this a semantic quibble.)

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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