I’ll explain the basics of Paul Ryan’s plan in this post.
Medicare has become the newest political talking point of the upcoming presidential election ever since Paul Ryan became Romney’s VP pick. A lot of people have heard great and horrible things from Republicans and Democrats, so there’s certainly some confusion surrounding this topic.
What are the Problems With Our Current Entitlement Programs?
First people need to realize that the current version of Medicare (as well as the other entitlement programs) is unsustainable. At some point in the near future, most likely my generation’s future, the programs would collapse if left unassisted. Our nation would be under an enormous amount of debt and we could be in the same situation as present-day Greece.
With that in mind, there’s obviously a need to reform Medicare. It’s just a matter of “When will it happen?” and “How much will we have to change/sacrifice?” I don’t think it’ll be a smooth transition from what I’ve seen with our budget. I’m no economist and I’m not qualified to give out expert opinions or anything… But if you look at our budget, the problem is very apparent.
Big change will have to occur.
What Is Paul Ryan’s Solution To Our Medicare Problem?
So we’ve established that there are some major flaws within our current system. Naturally, if we hope to maintain these incredibly beneficial (and costly) programs, our next step is to make some changes; we must reform the programs. This is where Democrats and Republicans differ.
Paul Ryan’s controversial plan would turn Medicare into something called a premium support plan. In this type of plan the government would offer seniors a predefined amount of money to spend on health insurance. The plan would give vouchers to seniors which would allow them to purchase either private insurance or traditional, government-run insurance on an exchange.
The plan would go into effect in 2023. This means that no person over 55 would see any changes to Medicare.
The end result would go something like this:
Private insurers would compete with the traditional Medicare program to offer the best plan possible for the level of “premium support” that a senior gets. Once a senior had a plan, he would have to pay out of pocket for any health care costs the voucher couldn’t cover. – Stephanie Condon, CBS Report
How Would Paul Ryan’s Plan Work?
The federal spending dedicated to Medicare would have to be capped at some point for this program to work. Paul Ryan’s plan has chosen to cap spending at half a percentage point higher than the growth rate of the economy.
But why does Paul Ryan think it’s a good idea to create a voucher system with public sector/private sector competition? Because he believes the competition will force private insurance companies to lower their prices. The fundamental change that Medicare will go through may compel seniors to spend less on health care, thus compelling health care providers to accommodate for the new demand by lowering prices.
Will Paul Ryan’s Plan Cost More? Is It A Good Plan?
Hard to say. In theory, yes it could cost more. Probably will. It is tough to force a market which is so fragmented (like the insurance industry) to let the market power control prices. Also, according to Uwe Reinhardt, a health care economist at Princeton University, there is no evidence that the growth of health care spending will correspond with the rate of economic growth. Many experts believe health care will jump back up to higher levels when the economy improves, as opposed to the lower levels we’ve been experiencing recently. Drastic jumps could lead to higher prices.
Critics are weary of this plan, it is certainly the most extreme reform on the table. As I said before, I’m not exactly qualified to go into a deep analysis… so unfortunately I am not absolutely sure if Paul Ryan’s reform plan is the right path or not. We’re going to have to sacrifice more if we want to keep these systems running. In that sense, it looks like Paul Ryan is on the right track. But, again, I can’t say that with much certainty, it is just my opinion.
One thing is for certain: any reform is going to be worse than our current system in some way(s). That’s just what happens when we have to accommodate for a much larger population with stringent monetary funds.
I hope this quick article was informative. Please correct any false information by posting the correction in the comments section. Just supply a reliable bunch of sources which prove your claim and I’ll edit my post. I don’t think I misconstrued anything, though. Well, I hope!
See you next time! Be sure to subscribe and like my Facebook page!