The TV-ready soundbite that Democrats like to use when attacking Paul Ryan’s Medicare overhaul plan, which would turn Medicare into a premium support program, is that it “ends Medicare as we know it” — or, when they’re feeling the apocalypse coming on especially hard, “ends Medicare.”
This tends to play well with seniors wary of any change to the program. But it ignores the sizable portions of Medicare that already work in basically the same way. Another way to describe Ryan’s proposed overhaul, then, would be to say that it expands on the idea behind two parts of Medicare that seniors know and like: Medicare Advantage and Medicare Part D, both of which offer seniors a menu of private plans to choose from.
And, as The New York Times made clear in an article over the weekend, these sections are working well enough that the administration has seen fit to brag about their successes. To some extent this is just political: Administrations want to be able to say that their programs work. but there are real successes here, especially relative to the traditional Medicare alternative. For example, The Times notes, the administration has pointed to a 10 percent increase in enrollment in Medicare Advantage, as well as a 7 percent decrease in average plan price. So average plan costs are decreasing, and more seniors are choosing to enroll in Medicare’s system of private plans. And as I noted last week, there’s new evidence to suggest that private insurers operating in the program provide equal benefits to traditional Medicare at lower cost.
Meanwhile in Medicare Part D, the prescription drug benefit passed under the Bush administration, plan prices have come in under expectations and a held steady even as health costs have gone up elsewhere. Overall the program costs almost a third less than originally predicted. Part of that disparity is probably due to the slowing of the drug development pipeline. But Joseph Antos of the American Enterprise Institute has made a strong case that the program’s reliance on competition between private insurers has also helped keep costs in check.
There’s another thing about these programs: Seniors seem to like them and want to use them. Currently about 50 million seniors are enrolled in one or both. Surveys consistently show that the vast majority of seniors of like their Part D plans; satisfaction levels hover close to 90 percent. As I already noted, enrollment in Medicare Advantage is increasing.
Just because beneficiaries like and use a program isn’t enough to justify it, of course. And there are real problems with Medicare Part D — one of the biggest being that when it was passed, Republicans in Congress didn’t even bother with the pretense of trying to pay for it. Nor is converting Medicare into a premium support system the ideal way to overhaul the government’s most expensive health entitlement, especially now that both Ryan and Romney are pushing plans that would leave a government-run, fee-for-service Medicare option in place.
But given Medicare’s unsustainable long-term spending path, I’d say that restructuring the program in a way that attempts to end the program’s unlimited commitment is probably better than either of the other most talked about options: delaying reform (which means doing nothing), or betting that yet another technocratic overhaul of the program's reimbursement structure will restrain spending growth despite decades of evidence that these sorts of centrally planned price and payment systems never work as planned.
I would prefer a more comprehensive overhaul of the health system that focuses on restoring price signals to medical practice while diverting the bulk of public health resources to covering the poor and sick rather than the middle class. But until then, why not take a cue from the growing evidence that reforms harnessing competition between private plans can work — restraining spending growth and offering choices while keeping the people who use it (or soon will) happy, not ending Medicare as seniors know it but building on parts of it that they already like.