A Reform that Might Work

December 29, 2011

Could legislators really improve Medicare's fiscal picture? And, is it possible while also delivering choice of insurance coverage to millions of younger, working Americans?

Maybe it was too much eggnog and holiday spirit, but the news last month that a key Republican congressman and an influential liberal senator had joined forces on a health reform plan made me think, at least briefly, that there might be a glimmer of hope for Washington, after all.

It wasn't the show of bipartisanship that warmed my cockles. I'm aware that the brainchild of Rep. Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) has no immediate chance of happening. (Heck, even they know it; the men will introduce no legislation to codify their plan for at least a year.)

What's impressive is the actual idea, which would improve Medicare's fiscal picture if not to "save" the troubled program, while also delivering to millions of younger, working Americans health insurance options currently denied them by the Affordable Care Act (ACA).

Here's how it would work: Medicare would adopt a version of the "premium support" voucher program that Ryan advanced in the fall, as part of his much-maligned "path to prosperity." But unlike that plan, the newer proposal would allow Medicare recipients the option of remaining in traditional Medicare. Those who choose the voucher model would find them more generous. The biggest problem with Ryan's initial plan is that the value of the premium support would not have kept up with the cost of insurance over time, leaving seniors to pay the difference and robbing them of the guarantee of coverage.

The new plan corrects that problem, albeit at a much greater cost. How much greater? There is cost analysis by the Congressional Budget Office because there’s no actual legislation. Still, I suspect it would Medicare’s long-term fiscal picture some. Medicare would still be going bankrupt, but more slowly. Baby steps, people.

Medicare recipients, meanwhile, would get to choose their health plan, paying more for more expensive choices while pocketing any savings from cheaper ones. The government would ensure that all available plans meet minimum standards.

But the best part of Ryan-Wyden is that it would extend choice to non-Medicare recipients. Most companies that provide health benefits to workers offer only a single insurance carrier; employees can take it or leave it. The worst thing about the ACA's individual mandate to buy insurance is that it denies consumers even that basic choice - and thus freezes the anachronistic employer-based health insurance model in place forever. Ryan-Wyden goes a long way toward undoing that mistake. It would allow businesses with fewer than 100 employees the option of providing workers with vouchers instead of directly offering insurance benefits. Just like seniors, the workers would use the subsidy to purchase their own health insurance in the state-based exchanges set up by the ACA. It would provide millions of consumers with healthcare choices they don't currently have and will never get under the ACA. None of this requires the ACA's repeal.

That's why the president's immediate condemnation of the plan was as disappointing as it was predictable. Of course, Democrats had planned to spend 2012 bashing Republicans for their determination to "end Medicare as we know it," and the liberal Wyden's embrace of Paul Ryan complicates the demagoguery. But Wyden is someone known for being more interested in solving problems with innovative policy solutions than in scoring political points and scratching out narrow electoral victories. Isn't that what Barack Obama wanted to be known for, too?

Bob Keaveney is the editorial director of Physicians Practice. What do you think of the prospects for reform? Tell us about it in the comment box below. Unless you say otherwise, we'll assume that we're free to publish your comments in upcoming issues of Physicians Practice, in print and online.

This article originally appeared in the January 2012 issue of Physicians Practice.