The Agenda

Clarity

Rep. Paul Ryan has written the following:

We do not have a choice as to whether Medicare will change from its current structure. It is being driven to insolvency. An honest debate requires a serious discussion of how Medicare will avert its collapse and be made sustainable. Unfortunately, but not surprisingly, the Democrats’ political machine has attacked my contribution to this debate, making the false claim that the only solution put forward to save Medicare would “end Medicare as we know it.”

Given that Rep. Ryan intends to change the way Medicare works, what can he mean? Many on the left suggest that he is lying or at least obfuscating the truth. My sense is that “Medicare as we know it” is a safety net program designed to guarantee that retirees have adequate provision for medical care. In this sense, Rep. Ryan does not intend to “end Medicare as we know it.” Rather, he intends to put it on a sustainable path. Matt Yglesias disagrees:

As Ezra Klein, previously a defender of Ryan’s integrity, observes people are accusing him of wanting to end Medicare as we know it because his plan would end Medicare as we know it. The existing single-payer system would be scrapped. In its place would be a system of means-tested vouchers to buy private insurance whose value would grow more slowly than the cost of health care. Basically Ryan’s idea is that old people should get medical care if they’re rich, and not otherwise. 

Meanwhile, since the non-rich won’t be utilizing health care services as many health care services, per unit treatment costs for should decline. This is a pretty standard view of how things ought to work—people should get stuff if they’re rich enough to pay for it, and not otherwise. And it’s Ryan’s view of how health care should be apportioned among the elderly. But for a guy who’s being widely praised for his honesty and willingness to face up to tough choices, he’s incredibly reluctant to describe his plan with any clarity. [Emphasis added.]

This is an interesting statement. A couple of thoughts come to mind:

(1) Does it make sense to treat “medical care” as a single thing? Or can we make distinctions between medical procedures that are cost-effective and those that aren’t? One of the arguments behind PPACA is that the federal government should play a role in encouraging the use of cost-effective treatment. The rich, presumably, will be allowed to use treatments that aren’t deemed cost-effective, provided they bear the bulk of the costs involved. 

(2) If we do indeed treat medical care as a single thing and we guarantee that old people will be able to consume as much medical care as they’d like regardless of quality or cost-effectiveness, will the program that finances this peculiar arrangement prove sustainable over the long term? I imagine the answer is no. 

 I don’t think Matt is drawing the kind of distinctions we need to understand the underlying debate.

Another way of characterizing Rep. Ryan’s approach is that he wants to encourage insurers and providers to organize medical care in new ways that emphasize cost-effectiveness. Limiting subsidies is a tool for introducing a measure of spending discipline, rewarding the most cost-effective providers. This parallels a number of ideas in PPACA, though Rep. Ryan takes a more decentralized approach. There is plenty of room for disagreement regarding the virtues of centralized vs. decentralized approaches to encouraging innovation and delivering quality care at low cost. One of the things we try to do here is weigh the evidence. 

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