Democratic Sen. Ron Wyden and House Budget Committee Chairman Paul Ryan on Thursday plan to introduce a new Medicare reform plan that would allow seniors to choose between traditional Medicare and new private insurance programs.
The plan has some key differences from the Ryan blueprint that Republicans had rallied around earlier this year — and which Democrats had been united in pummelling in Congress and on the campaign trail as the beginning of the end of Medicare.
The biggest difference is that seniors would have a choice between staying in traditional Medicare, or opting into new private plan alternatives.
Wyden is the first Democrat on Capitol Hill to so strongly embrace a variant of Ryan’s approach. And Ryan has accepted more flexibility than the Medicare approach in the House budget.
Wyden insists the plan would be designed in ways that would preserve the safety net for the elderly.
“I will never do anything to shred that or weaken it or harm [Medicare] in any way,” the Oregon Democrat said in an interview with POLITICO. “I simply believe that there is now an opportunity for progressives and conservatives to come together and to strengthen the program for the long term and particularly, deal with the costs and demographic challenges.”
The Ryan budget plan would have moved seniors in the future into private health plans, with government subsidies known as either premium support or vouchers.
Ryan and Wyden plan to release a white paper with more details Thursday at the Bipartisan Policy Center.
The plan has the potential to be a political firecracker, but its most significant change — keeping traditional Medicare as an option — eliminates the greatest political assault lobbed at Ryan’s plan: that it would “end Medicare.”
The Wyden-Ryan plan has other significant differences from Ryan’s original proposal: It institutes a series of consumer protections for seniors, it installs a cap on total Medicare spending and changes the way premium support is calculated.
Ryan said he’s concerned that if genuine changes to Medicare don’t take place soon, there won’t be enough of a financial cushion to gradually institute a new plan while allowing seniors to remain in the system they know now.
“If you wait and allow the political paralysis to stop us from fixing and saving this program, then you’re not going to be able to grandfather people,” Ryan said. “Then you’re going to have severe disruptions in seniors’ lives that would just be, I think, morally wrong because we see this problem coming. What Ron and I are trying to do is prepare the ground for a consensus to be accomplished as soon as the politics allow it to happen.”
Just like in Ryan’s House budget, seniors would get premium support — a government subsidy that’s also been dubbed a “voucher” — to help buy coverage, whether in the private market or through Medicare.
Beginning in 2022, they’d buy coverage through a Medicare “exchange.”
Insurers would be able to sell coverage if they meet federal requirements designed to protect consumers. They would have to meet actuarial requirements, sell a program at least as comprehensive as traditional Medicare and agree to offer insurance to all seniors, regardless of age or health status — to prevent insurers from cherry picking the healthy and cheaper clients.
In some ways, the exchange approach and the regulations are similar to the new state-based insurance markets creating by the health reform law for the under 65 population starting in 2014.
Under the Ryan-Wyden approach, the senior would have to pay the difference between the sticker price and the premium support or subsidy, although low-income people would get more help.
The House budget version tied the premium support to the Consumer Price Index. In this plan, it would be tied to the second-least expensive private plan or Medicare, whichever is lower.
Ryan predicts the market would look like the Federal Employees Health Benefits Plan, one that insurers want to participate in because of its predictability, stability and large pool.
Wyden and Ryan argue that the consumers’ choices will drive insurers and Medicare to be more efficient and price conscious, which would drive down all Medicare spending. If not, they’d require Congress to act if Medicare spending growth exceeded the Gross Domestic Product plus 1 percent.
The cap is a new feature that is designed to ensure that Medicare spending would be kept under control.
It a somewhat similar concept to the health reform law’s Independent Payment Advisory Board, which requires action when Medicare spending hits a certain level. Republicans strongly oppose IPAB.
While the IPAB requires a 15-person board to decide what to cut when the spending triggers are hit, the Wyden-Ryan plan requires Congress to intervene and choose what to cut, such as provider reimbursements, overheard or means-tested premiums. They’re still discussing if and how it would be enforced.
“Rather than have a group of 15 people impose price controls to live within a cap, we’re giving the power to senior citizens through choice and competition to let the market make those decisions with them,” Ryan said in the joint interview.
At first blush, Wyden and Ryan may look like an unlikely duo to team up on a Medicare reform plan. But they share an interest in policy over politics and both have worked on health policy issues and bipartisan bills.
On health care especially, Wyden has shown that he’s willing to work outside of what his party supports. During the health reform discussions in 2009, he supported eliminating the employer sponsored tax benefits on a bill co-sponsored by former Sen. Bob Bennett (R-Utah).
After the reform law passed, he introduced a bill that would allow states to implement their own reforms more quickly than the law would let them, as long as they covered as many people. President Barack Obama publicly endorsed that state flexibility but Majority Leader Harry Reid hasn’t put the bill on the floor.
Ryan has a record of bipartisanship, too. He and Alice Rivlin, who led the budget office for former President Bill Clinton, released a Medicare reform plan, too, although the version that Ryan led through the House went farther than Rivlin could accept.
Wyden’s move is unlikely to go over well with Democratic leadership. Politically, Democrats feel that Ryan’s plan gave them the upper hand on the Medicare message ahead of a pivotal election year.
Both Ryan and Wyden acknowledge that any Medicare reform proposals can be quickly turned into a political weapon by the other side. But they hope that by releasing a detailed plan without legislative text — and the worry about having to decide whether to vote for it or not — can help foster serious discussion.
“People don’t have to descend on their congressperson [and say,] ‘Don’t vote two weeks from today for such and such,’” Wyden said. “This is a chance to get beyond the discussion that’s been held.”
View online at Politico here.