The Ryan Plan, Health Care. and Which Way to Go

Rep Ryan has detailed at a high level his plan. He states:

In 2010, health-care costs rose by over 7 percent, compared to around 1 percent for all other goods and services.

This is putting enormous pressure on Medicare and Medicaid. But these programs aren’t just affected  by rapidly rising health-care costs – they are actually a key driver of inflation in the  health-care sector. Nearly 50 cents of every dollar spent on health care in this country is spent  by federal, state or local government. Because of the design and structure of these programs, much  of the government’s money gets wasted – and shows up as inflation in the cost of care.

Everyone who is on Medicare or knows someone on Medicare has stories about waste in the system – unnecessary tests, redundant treatments, and the cost in both time and money of mistaken billings  and misplaced records.This kind of waste is inevitable in a top-down, government-run system, and it’s a big  reason that costs have spiraled out of control.

Yes, these costs are rising as we had examined two years ago. The reasons are several fold. First  people take poor care of themselves and when the reach Medicare age they have already placed themselves at risk. Second we can do a great deal more. Third people are living longer, albeit with increased costly care. He continues:


Real reform – especially with respect to Medicare – must eliminate this unsustainable waste and reduce inefficiencies and costs by giving beneficiaries themselves more control over their own  health-care benefits and decisions.

Waste has always been a factor focused upon as a cost reduction. However that can and should be done in the system as it stands. It does not require a another new law.

He does make a useful point regarding the new health care bill:

Nevertheless, even if these efforts worked, the tradeoff in terms of lost freedom would be completely unacceptable. This approach would transform the relationship between citizen and state, leaving individuals helplessly dependent on their government. On a more practical level, it would substantially diminish quality of and access to care. There is no way for “experts” in Washington to know more  about the health care needs of individual Americans than those individuals and their doctors know.

Namely having some GS9 decide on your health care will not work. Yet the counter side is that you as an individual have a duty to refrain from personal choices which put you at risk and cost society. How to do that is the key.

His proposal in brief is:

• Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks.

• Ensure that the cost of frivolous litigation is not passed on to consumers in the form of higher health-care premiums by capping non-economic damages in medical liability lawsuits.

• Stop the raid on the Medicare trust fund that was going to be used to pay for the new health care law. Any current-law Medicare savings must go to saving Medicare, not financing the creation of new open-ended health-care entitlements.

• Fix the Medicare physician payment formula for the next ten years so that Medicare beneficiaries continue to have access to health care.

The first is in essence the elimination of Medicare. What he suggests has great risks in that it will throw a mass of society onto the health care system at their most vulnerable time in life. No company offers retirement health insurance, almost none, except Government and union workers. That means the people creating the wealth will be subsidizing those consuming the wealth. Second, as we have written, it is not clear that tort relief saves a great deal. As to the Medicare Trust fund, it has been robbed! As we have shown time and again if one has a reasonable job in life one contributes more to Medicare than one receives! But Congress took the money. Finally the fixing the reimbursement formula is essential.

Should those on Medicare be in fear? Not for the short run, but now that the shot has been sent across the bow they must be wary.