TaxVox » Blog Archive » A Medicare Reform Plan That Just Might Work

Senator Ron Wyden (D-OR) and House Budget Committee Chairman Paul Ryan (R-WI) did a remarkable thing: They announced a bipartisan plan to fix Medicare, probably the most contentious of policy issues.

And amazingly, what they came up with might just work…….

Ryan-Wyden would work like this:

  • Those 65 and older would receive a subsidy to purchase insurance. They could either buy traditional Medicare or a private policy that met government benefit and marketing standards.
  • Private insurers would have to offer plans at least as good as fee-for-service Medicare and be barred from denying coverage based on pre-existing conditions.
  • The subsidy would be tied to the cost of the second-lowest cost private plan or traditional Medicare. This would be relatively generous.
  • Seniors would buy coverage through an insurance market that would very likely mimic the exchanges in the 2010 health law.
  • For the first time, the proposal would cap Medicare cost growth. Thus, instead of continuing Medicare as an open-ended entitlement whose costs automatically rise with health expenditures, the program would impose a global budget on the program. In theory, at least, the combination of market competition and this overall budget would slow the growth of Medicare costs. This could be the most contentious element of the entire plan.
  • The plan would provide additional subsidies for low-income seniors but increase premiums for those with high-incomes. It would also offer a new catastrophic benefit.
  • It would apply only to those who turn 65 in 2022 or later.

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