The Ryan plan is something a Rand acolyte could love, at least as a first step toward her utopia. In the healthcare realm, it would convert Medicare into a voucher program, with the government giving seniors a contribution estimated at $8,000 to start to buy private health insurance beginning in 2022. It would convert Medicaid to a block grant program, giving the states lump sums of money. Federal Medicaid spending would be cut by $771 billion over the next decade. And Ryan's proposal calls for repealing the Patient Protection and Affordable Care Act.
Numerous analysts have noted that Ryan's plan would drastically increase costs to seniors. According to the Congressional Budget Office, the cost to buy health insurance and the projected cost to pay for typical care in 2022 would total about $20,510. That would leave the elderly to pay the difference of $12,510 per year.
Aside from the devastating impact this could have on many senior citizens, providers would surely suffer from drastically reduced revenue and increases in charity care. Slashing Medicaid funds and dumping the mess on the states would render similar pain.
As for trashing the reform law, a group of nearly 200 economists last week sent a letter to Republican and Democratic congressional leaders urging them to retain the reform law and reject Ryan's Medicare and Medicaid plans.
“The right way (to reduce Medicare spending), in our view, is to create a healthcare delivery system that provides patients with the right care at the right time,” the letter said. “That means developing information on what works and for whom and creating incentives for providers to deliver that care and to do so in cost-effective ways. … The Affordable Care Act takes this approach.”
President Barack Obama entered the drama last week, trying to play Detective I.M. Moderate to Ryan's Lethal Weapon. (Republicans, in contrast, viewed Obama as “too partisan.”) He rejected the voucher plan and proposed Medicare spending caps relative to per capita growth in the gross domestic product. Spending restraints would be enforced by the Independent Payment Advisory Board or the HHS secretary. The 15-member advisory board, created by the reform law, has already proven unpopular with providers over its potential to cut payments without congressional approval.
Obama's plan also would replace the federal matching rates for state Medicaid and Children's Health Insurance Program spending that vary by state with a single matching rate, achieving $100 billion in Medicaid cuts over 10 years.
Now that the president's proposal is on the table, congressional bigwigs will try to find a compromise between the Obama and Ryan plans. That won't be easy given the philosophical divide, and either way, providers are going to pay for decades of the world's highest healthcare costs. Now they have to decide which lousy deal they prefer. They can read Atlas Shrugged while they're waiting in Ryan's office.