August 21, 2012

Paul Ryan and the Future of Medicare

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The nomination of Rep. Paul Ryan to the Republican ticket on August 11 has brought the 2012 election into a new phase. Ryan is known as the architect of the proposed Republican budget, “The Path to Prosperity,” and has become known as a conservative intellectual heavyweight.

His budget envisions a U.S. government with very different priorities, with drastic tax and spending cuts. The nomination of Ryan to the ticket anchors the Romney campaign to the far right and has defined the race along ideological battle lines.

A point of contention between the two campaigns is how changes to Medicare will affect Americans. Unfortunately, both sides are using scare tactics in order to influence uninformed voters. The public discourse this campaign season has reached an all time low. This is tragic because America faces a pivotal moment of change and neither party has perfect solutions to the problem. Moreover compromises will need to be made in order for Congress to begin solving the nation’s massive budget problems. That being said this election does represent a very clear choice.

The cost of Medicare and other entitlement programs has been growing dramatically and their projected cost is unsustainable. Both the Republican’s proposed budget and Obamacare aim to reduce costs by saving $700 billion in reductions on reimbursements from hospitals, as well as fees from pharmaceutical and private insurance companies. Yet Republicans are attacking Obama for the reduction of costs, by claiming that the decline in costs will result in a loss of benefits; even though their plan proposes the exact same policies.

The truth of the matter is that Ryan’s budget is far more radical than Obamacare, and also proposes changing Medicare to a voucher based program. Under the voucher system, beneficiaries would receive a fixed sum to buy private insurance. The price of the voucher would be tied to the rate of inflation, which is a slower growth rate than the rate at which medical care grows, which is usually 5 percent higher than the rate of inflation. In the long term the idea is to privatize health care, with the goal of increasing efficiency through greater economic competition according to free-market economic theory. The risk is that in the future, the government would no longer be guaranteed to provide affordable Medicare.

It comes down to the age old question of markets vs. government. On the one hand, Mr. Ryan’s plan ends the government’s open ended commitment to Medicare and this does help to address the core unsustainable costs of Medicare, but it relies on free market mechanisms to lower costs and deliver care, which are far from guaranteed. In the short term however there is no question, Obamacare expands coverage to more people and makes healthcare more accessible.

While Republicans attack Obama for the same cost reductions in Medicare as they themselves propose, and wage a campaign against the Affordable Care Act without clearly presenting an alternative plan beyond general free-market mechanisms, Obama and the Democrat’s proposal is clearly the stronger of the two.

Original Author: Anondo Mukherjee