House Budget Committee chairman Paul Ryan (R.-Wisc.) is minutes away from unveiling his proposed budget for fiscal year 2012. I’ll have much more to say in this space about Representative Ryan’s important proposal in the days ahead. To start things off, however, here is an excerpt from a post I wrote for the New York Times “Room for Debate” series. I say a bit about the Ryan plan’s approach to reforming Medicare — and defend the plan against those who claim that the proposal would unfairly burden Medicare’s elderly beneficiaries:
The idea is to move toward a system where the government provides a fixed contribution that the beneficiary controls, not the government. The key is that the government’s contribution is set independently of the choice made by any one beneficiary. If Medicare participants choose a somewhat more expensive option, they will pay higher premiums. If they choose less expensive options, perhaps through a more efficient delivery system, they will pay less. With cost-conscious consumers, the 2003 Medicare prescription drug benefit has held down costs remarkably well — and much better than anyone expected. The new Ryan proposal builds on that model.
Critics say this reform would simply shift costs and risks to the beneficiaries. That critique ignores the enormous risk now placed on beneficiaries by the Affordable Care Act. Payment-rate reductions look like cost control on paper, but they provide no guarantee that patients will be served.
Moreover, as stated previously, what’s needed in the health sector is a large step-up in productivity. What’s more likely to bring that about: Another round of government-led efforts to engineer more efficiency? Or a functioning marketplace that rewards effective cost cutting with market share?
The Ryan plan is the most important step Congress could take to fix what ails American health care — and it does so in a way that heads off a fiscal crisis, too.
You can read the entire post here.