Analysts may be correct that the presidential election won’t primarily turn on entitlements reform, but by choosing Paul Ryan as his running mate, Mitt Romney can, contrary to conventional wisdom, make it a winning issue and lay the foundation for a reform mandate when he wins.
Besides, the economy and entitlements are wholly integrated issues: We cannot ultimately fix the economy long term without entitlement reform, and we can’t balance the budget or retire the debt without a growing economy.
Democrats appear jubilant about the Ryan pick, believing his close association with entitlement reform provides an opening for them to scare seniors into thinking they’ll lose Medicare and Social Security benefits.
But what they haven’t factored in, or are pretending to deny, is that Ryan’s presence on the ticket ensures that Romney and Ryan will tackle the entitlements issue head on and that Democrats will not have the luxury of merely fear mongering. They’ll have to deal with the substance of these issues, and this is a battle they cannot win, because the facts are their foe. Let’s examine these facts briefly.
No one can reasonably deny that Medicare is headed for insolvency, and that Medicare’s insolvency, if not rectified, will lead to the federal government’s insolvency. President Obama has admitted that Medicare is on an unsustainable course and that no amount of tax increases can fix it. The Congressional Budget Office tells us that Medicare spending has increased fivefold in the past 42 years, dramatically more than all other categories of federal spending.
Short of severe price controls ordered and enforced by Obamacare’s Independent Payment Advisory Board, which common sense and the history of such controls demonstrate will not work to reduce costs absent rationing and radical reductions in access to care, Obama has no plan to restructure entitlements. Only a restructuring of the program can work.
The Ryan-Wyden plan (Sen. Ron Wyden is a Democrat), which Romney has essentially embraced, is a type of hybrid system that includes market reforms while guaranteeing comprehensive coverage for Medicare beneficiaries. That is, the law would provide guaranteed coverage, but the costs for such coverage would not be unilaterally determined by the government and thus open-ended, out of control and manageable only by rationing boards (resulting in reduced access to care), but by a competitive process.
Under the current system (and under Obamacare), the government sets the price (the reimbursement), and the absence of competition guarantees spiraling costs and/or rationing. Under Ryan-Wyden, a bidding process among insurance providers, including a federal insurance provider, would determine the government’s premium-support payment to Medicare beneficiaries and would ensure that their out-of-pocket costs won’t exceed those under the current system unless they choose a more expensive option. This bidding process — competitive by definition — would contain or reduce costs.
Recent studies have shown that such competition works. The Medicare Advantage program, which was far less ambitious than Ryan-Wyden, produced a 9 percent cost reduction. The savings under Ryan-Wyden should be substantially greater.
Team Obama has no plan of its own and no credible rebuttal for the Ryan-Wyden model, so they have begun a vigorous disinformation campaign to distort the Romney-endorsed plan.
They say his plan would end Medicare as we know it. To the contrary, it is the only plan on the table that has a chance of saving Medicare from insolvency. Those now 55 and older would receive Medicare benefits as they currently exist. As for all others, they would receive the same type of comprehensive coverage (though the costs of that coverage would be reduced through market forces), and the older, sicker and poorer would receive preferential treatment.
In fact, it is Obama, not the GOP, who has assaulted Medicare, robbing it of $716 billion to shore up Obamacare. Obama can’t deny that he’s pilfered this money from Medicare, but speciously argues that it is a cut to health care providers, not Medicare beneficiaries. But cuts to health care providers always result in a reduction to access. Indeed, Obama’s own Medicare actuaries have warned that these cuts could result in providers discontinuing their participation in Medicare.
Obama also fraudulently claims that Ryan’s original plan didn’t put Obamacare’s stolen $716 billion back into the Medicare fund, either. But Ryan’s plan never took that money out in the first place because it involved a full repeal of Obamacare. Romney, for his part, clearly doesn’t contemplate robbing the Medicare fund.
Obama doesn’t believe in market reforms and so has no ideas other than to impose top-down cost controls, which cannot work. His re-election guarantees the insolvency of Medicare — and ultimately of the entire federal government.
The Romney-Ryan plan preserves benefits for current and future seniors and would drive costs down through competition, thereby shoring up Medicare’s solvency and averting the principal driver of national insolvency.
This is a debate Obama can’t win on the merits, so expect increasing demagoguery, fear and stridency. But the truth will prevail.