Does Ryan Want to Take Medicare Away from Seniors?

Editor’s note: A version of this article first appeared at Forbes.com.

A year ago, opponents attacked Rep. Paul Ryan (R-Wis.), claiming that his plan
to reform Medicare would kill grandma by taking away her benefits. Mitt Romney,
who, of course, has chosen Ryan as his running mate, is proposing similar
changes to Medicare. Does Ryan want to gut Medicare? To the contrary, Ryan’s
intention is to save Medicare. The problem, however, is that Ryan’s proposal,
although a step in the right direction, does not go far enough. More drastic
measures need to be taken to save Medicare so that it provides [4]a reasonable
level of benefits for future generations of retirees.

Medicare will soon be the biggest contributor to an unsustainable level of
federal government debt. Even progressive economists, such as Alan Blinder, who
generally support an increased role for government in the economy, realize that
Medicare spending is on an unsustainable path.

Congressman Ryan has raised hard questions about the future of Medicare.
Medicare spending was 3.2 percent of gross domestic product in 2008 and the
Congressional Budget Office projects it will rise to 9.5 percent by 2050.
According to Michael Cannon and Chris Edwards of the Cato Institute, if Congress
does not reform Medicare and other entitlement programs and continues to spend
the same share on other federal government programs, federal spending will
double from 21 percent of GDP in 2008 to 42 percent in 2050.

Although part of the reason for rising Medicare spending is the growing number
of retirees, spending per person has been rising much faster than inflation.
Because Medicare recipients are spending other peoples’ money, they have little
incentive to limit their spending. Waste and fraud are serious problems as
unscrupulous individuals try to get a share of the enormous amount of money
being spent. Much Medicare spending is for treatments that are not cost
effective, yielding too small a reduction in mortality or suffering to justify
the amount being spent.

The Obama administration’s plan and Romney’s proposal, which is very similar to
the proposal introduced by Congressman Ryan and Senator Ron Wyden (D-Ore.) in
2011, both recognize the need for holding down Medicare costs, but each takes a
different approach. President Obama’s plan maintains traditional Medicare while
seeking to use the power of the federal government to control prices and
implement a variety of cost-control provisions aided by various positive and
negative inducements. The Republican plan shifts costs from the government to
beneficiaries, replacing traditional Medicare with vouchers whose value will
grow more slowly than medical costs have been growing.

The president’s plan would take advantage of cost-effectiveness research and
proposes ending coverage for expensive procedures that offer few health
improvements. The problem is that this one-size-fits-all approach does not
adequately account for the diverse needs and situations of patients. Instead of
the federal government deciding what to cover and not cover, a plan involving
vouchers and private insurance would allow individuals the freedom to choose the
kind of coverage they want.

In the plan he announced in 2011, Paul Ryan proposed changes to Medicare that
would not take effect for 10 years and would reduce benefits only for those who
are now younger than 55. By putting off real cuts until 2023, the Ryan plan
would still add trillions to the national debt over 10 years. For the sake of
future retirees, more radical changes need to be made and the sooner the better.

Although Ryan’s proposal would not do enough to make Medicare sustainable, his
candidacy may make Medicare and fiscal responsibility (generally) central issues
in the 2012 presidential campaign, which is a good thing. The time has come for
responsible debate about Medicare, Medicaid, and other entitlement programs. We
cannot continue to ignore the looming fiscal nightmare any longer.

— Dr. Tracy C. Miller is an associate professor of economics at Grove City
College and contributing scholar with [5]The Center for Vision & Values. He
holds a Ph.D. from University of Chicago.
[6]

© 2012 by The Center for Vision & Values at Grove City College. The views &
opinions
expressed herein may, but do not necessarily, reflect the views of Grove City
College.

[7]www.VisionAndValues.org | [8]www.VisionAndValuesEvents.com

References

1.
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2.
http://www.visionandvalues.org/2012/08/does-paul-ryan-want-to-take-medicare-away-from-seniors/
3. http://www.VisionAndValues.org/
4. http://www.visionandvalues.org/2011/06/swindling-america-s-youth/
5. http://www.visionandvalues.org/
6.
http://www.visionandvalues.org/2012/08/does-paul-ryan-want-to-take-medicare-away-from-seniors/
7. http://www.VisionAndValues.org/
8. http://www.VisionAndValuesEvents.com/
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