Critical Condition

Clarifying Ryan’s Medicare Reform

As yesterday’s uncritical cheerleading of Paul Ryan’s budget proposal dies down, one of his loudest fans has taken a closer look. Yesterday’s Wall Street Journal editorial asserted (incorrectly) that Ryan’s proposal “means that at age 65 you would be able to keep your same insurer, with the feds paying for that insurance instead of your employer.”

As I’ve already noted, that was a feature of last year’s “Roadmap,” not this week’s proposed budget. The Wall Street Journal corrected the record in today’s editorial, which clarifies that “the subsidies will flow through Medicare, only to regulated insurers and government-approved plans. It does not go as far as Mr. Ryan’s previous ‘roadmap’ which offered direct cash vouchers for individuals who preferred to buy insurance themselves.”

(Not that Ryan’s retreating from the term will prevent “voucher” being used to describe his reform. Grace-Marie Turner has explained how “premium support” differs from a voucher, but even Ryan supporter Michael Cannon of the Cato Institute insists on describing it as a voucher.)

Of course, a good night’s sleep will not only allow the time-pressed scribbler to make sure that he has the facts right, but to put them in a better context. On the latter front, the Wall Street Journal does a better job today than I did yesterday, noting that Ryan “moderated his ambitions” because “reforms of this order are so unusual,” and that Ryan’s Medicare would look a lot like Medicare Advantage. Medicare Advantage is a popular alternative to traditional Medicare, whereby seniors can choose Medicare through a private plan, which does not have to pay providers according to the government’s Soviet-style fixed-price schedule.

Obamacare will drive about a half of participating seniors out of the program, as I discussed in a study of the costs and benefits of Medicare Advantage, so Republicans should be able to leverage this to their advantage in both the fight against Obamacare and Medicare reform. Of course, Ryan would have saved himself the grief I dealt him yesterday if his proposed budget had used the term “Medicare Advantage” instead of federal “tightly regulated exchanges,” which smacks of Obamacare.

But that is water under the bridge, and there is plenty of time to change the labels on the goods in the store. (In the study noted above, I describe a way to combine the best features of Medicare Advantage and Medigap to approach a market of real choice for Medicare beneficiaries.)

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