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Exclusive interview: Rep. Paul Ryan discusses need for 'market-based' health reform

Premium support an idea whose time has come, Ryan says


By Andis Robeznieks
Posted: August 14, 2012 - 12:45 pm ET
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Wisconsin Rep. Paul Ryan's selection as the Republican vice presidential nominee has put Medicare reform back in the national spotlight, as Ryan's plans for transforming Medicare into a "premium support" system gain renewed attention.

Of particular significance is how Ryan's plan to offer beneficiaries federal payments to pick the health plan of their choice goes over with voters in Florida and Pennsylvania—two presidential battleground states with large Medicare-beneficiary populations.

Ryan, who finished first last year on Modern Healthcare's 100 Most Influential People in Healthcare list, was interviewed Aug. 2 by Modern Healthcare for an upcoming story, just nine days before presumptive GOP presidential nominee Mitt Romney announced that the 42-year-old member of the House Ways and Means Committee would be his running mate.

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In the interview, Ryan emphasized that premium support wasn't only his idea or a Republican idea. He pointed out that he proposed last year's Medicare-reform plan jointly with Oregon Democrat Sen. Ron Wyden. Premium support's origins, he added, can be traced to President Bill Clinton's 1999 Bipartisan Commission on the Future of Medicare and its Democratic co-chair, Rep. John Breaux of Louisiana.

"This is an idea whose time has come," Ryan said. "And it's a bipartisan idea."

Ryan acknowledged that the idea takes some getting used to and said he knew that Congress would not pass last year's proposal.

"What Ron Wyden and I tried to do was to plant the seeds of a bipartisan consensus," Ryan said. "We knew we weren't going to pass it because of the politics. We did this together to get the consensus-building started."

To that end, Ryan said the plan's chances for approval will greatly improve next year.

"I'm actually pretty optimistic," he said.

Ryan said he heard from "some of his doctor friends" at the Wisconsin Medical Society that his plan was the subject of heated debate at the annual American Medical Association House of Delegates meeting in June and that he has had "years of conversations" about premium support with physicians in his state.

“I think it's a good debate,” he said. Medicare, Ryan said, can go in two directions: toward government-directed price controls as dictated by the Independent Payment Advisory Board or toward premium support, which he said "keeps the patient-doctor relationship intact."

"That to me is the best way to deal with costs and save this program," Ryan said. "Competition does work."

Ryan said he envisions a risk-adjusted program in which beneficiaries who need more support get it and said that risk adjustment is "something CMS knows how to do."

"Physicians are also involved in getting proper incentive alignment focused on quality and cost," Ryan stated.

“This will help everyone: Sick or healthy, wealthy and poor,” he added. “We can put society's assets where they need to go and emerge from that with a system that is in keeping with our goals of innovation, competition and quality improvement.”

Ryan also said the U.S. should undertake healthcare reform on its own and "fix this on our terms" instead of borrowing ideas from Europe.

"We believe there are far superior ways to get back to a patient-centered healthcare system, the nucleus of which is the patient and her doctor—and not the government," Ryan said. "We believe consumer-driven, market-based reforms do more to alter the cost curve of healthcare inflation."

Ryan said price controls won't bend the healthcare inflation cost curve and would lead to rationing of services.

Ryan credited his selection last year as the most influential person in healthcare to his having had a seat on the House Ways and Means Committee since 2001 and used that position to focus on the healthcare system's impact on health outcomes and economic and social issues.

"It's just something I've immersed myself in," Ryan said. "What a lot of policymakers have failed to grasp is how important healthcare is to our economy and to our future."

Ryan also predicted that Congress would approve another temporary postponement of a physician Medicare payment cut in January of around 30% under the sustainable growth-rate formula used to calculate reimbursement.

"I think the SGR is ridiculous and should have been replaced long ago," Ryan said, adding that he hopes to replace the SGR next year with a formula that furnishes doctors with something predictable and accountable so that "we don't have this can-kicking exercise every six months."

While the SGR has not worked, Ryan said something worse lurks ahead.

“I always say to the doctors, 'If you don't like the SGR, just wait until you see what the IPAB has in store,'” Ryan said.


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