Stealthy Christmas Truce Offers Way Forward for Medicare: View

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The curious document released Dec. 15 by Democratic Senator Ron Wyden of Oregon and Republican Representative Paul Ryan of Wisconsin was eclipsed almost as soon as it appeared by the House Republicans’ hapless stand against extending the payroll tax cut for two months.

But it’s worth dusting off the Wyden-Ryan Medicare plan for a closer look. For one, its actual title is mysterious -- “Guaranteed Choices to Strengthen Medicare and Health Security for All” -- and the motives of the two lawmakers appear more mysterious still.

“Guaranteed?” “Health Security for All?” Those are, to use another phrase taken from the plan, the sort of “iron- clad” claims that rarely attach themselves to social insurance programs these days, especially when a prominent Republican is one of the authors.

Yet Wyden and Ryan have been around this policy block before; each was more or less run over after venturing into the mean streets of health-care reform. In 2008, Wyden teamed up with Republican Senator Robert Bennett of Utah on a bipartisan health-care overhaul that won praise from wonks but went nowhere in the Senate. (At least Wyden still has a job. Bennett, summarily convicted of the crime of working with a Democrat, was turned out of his Senate seat by a Tea-Party-dominated Republican state convention.)

For his part, Ryan wrote the House Republicans’ 2012 budget. Like the Wyden-Bennett bill, Ryan’s blueprint was a dead letter in the Senate, after House Republicans voted for it en masse in April. They’ve been trying to figure out how to defuse the plan’s politically explosive mix of deep cuts in Medicare and huge tax cuts for the wealthy ever since.

Premium Support

The plan Wyden and Ryan produced together lacks the details necessary to gauge its full merit. But the outline is intriguing. Ryan’s previous proposal would have transformed Medicare into a premium support system with vouchers supplanting government insurance. The plan also capped increases in federal spending on health insurance for senior citizens at 1 percent a year, a steep cut when one considers that Medicare’s costs have increased at an annual rate of 8.2 percent over the last 15 years. Eventually, the failure of the premium support to keep pace with health-care inflation, and the lack of additional downward pressure on costs, would have broken the system.

The Wyden-Ryan plan is also a premium support plan -- but a more generous and realistic one if the goal is to ensure that Medicare is a viable health-insurance program for Americans over 65. Beginning in 2022, the plan caps Medicare spending at 1 percent more than the nation’s rate of gross domestic product growth, plus inflation. Because health-care costs have been growing far more rapidly than that, and because those costs are the biggest driver of future budget deficits, the plan still needs other ways to save money. It proposes the creation of highly regulated health-care exchanges, where private health plans would compete to serve Medicare beneficiaries.

If that sounds familiar, welcome to 2009. What Wyden and Ryan have proposed is remarkably similar to the Affordable Care Act -- aka Obamacare -- for the over-65 set. The only difference is that they’ve embraced a “public option” -- traditional Medicare -- to compete with private insurance plans on the exchanges.

Some liberals were quick to accuse Wyden of providing political cover for Republicans seeking a retreat from Ryan’s last plan. If that’s true, it’s unclear how effective it will be. The House vote in April is a matter of public record; it can’t be easily expunged.

Republican Challenge

Although Wyden was the one accused of aiding and abetting the enemy, it’s actually Ryan who traveled the greater, and perhaps more perilous, distance. By replacing his previous plan with one that, at first blush, appears more realistic and sure- footed in safeguarding seniors’ access to health care, he is creating both an opening and a challenge for his party, especially in the House where Republicans have thrown themselves into partisan warfare and symbolic protests at the expense of governing.

Ryan’s Republican colleagues made him a hero earlier this year. The question they must answer now is very simple: If Wyden-Ryan’s premium support plan with a public option is a perfectly good idea for a 65-year-old, how is it that a more free-market approach -- premium support without a public option -- constitutes socialist tyranny for a 64-year-old? Wyden-Ryan might offer some modest political cover for House Republicans, but it also exposes the incoherence of their attack on health- care reform.

In a less-polarized environment, the Wyden-Ryan plan might offer the building blocks for fusing Medicare and health-care reform for those under 65 into one comprehensive system. The plan even suggests as much in its final page, with sections on “Maximizing Options for Workers” and “Ensuring a Smooth Transition into the Medicare Program.”

Nothing of consequence will happen on the plan in 2012, when serious fixes remain on hold while the parties fight what is sure to be a fierce, ugly election contest. Without a change in the political culture, such fixes may not happen at all. But during a holiday season in the capital that was notable largely for its acrimony, Wyden and Ryan showed that good will, combined with good sense, can still inspire policy entrepreneurs. Now if only the entrepreneurs can find a market for their wares in Washington.

To contact the Bloomberg View editorial board: view@bloomberg.net.

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