While the Democrats like to claim that the Ryan plan “ends Medicare as we know it”, in reality the proposed overhaul would turn Medicare into a premium support program. Although most seniors are wary of any change to the program, the Ryan plan puts more emphasis on the areas of Medicare that already work.
Ryan’s proposed overhaul expands on the two parts of Medicare that seniors already know and love: Medicare Prescription Drug Plans (Part D) and Medicare Advantage Plans (Part C). Both of these privatized systems offer beneficiaries a menu of private plans from which they can choose.
As The New York Times pointed out in an article over the weekend, these Medicare programs are working so well that the Obama administration is crowing about their success. Forget the political posturing by the administration, there are honest to goodness successes here, especially when compared to the original Medicare fee for service alternative.
The Times points out that the administration claims a 10 percent increase in enrollment in Medicare Advantage, in addition to a 7 percent decrease in plan premiums. This lends weight to the Ryan proposal: plan costs will decrease as more seniors choose to enroll in the privatized plans.
The fundamental difference between the cost saving strategies between the Democrats and Republicans comes down to one single issue: who controls the cost? The Obama administration plan keeps emphasis on the Original Medicare private fee for service model. Costs are controlled by regulating what the government will pay service providers and how much insurance companies can earn. The updated Romney-Ryan plan shifts more emphasis to private insurance plans and allows increased enrollment and competition to regulate costs.
Given the massive fraud problems with Original Medicare — an estimated $60-billion per year — wouldn’t privatized HMO and PPO plans do a better job of curbing the fraud problem? If not, I for one would like to know what the government is doing about this growing problem.