→ The Truth about Medicare Spending

Excellent piece from Yuval Levin explaining the horrible financial shape that Medicare is in and Paul Ryan’s proposal to fix it:

The Ryan-Wyden idea solves that problem through a clever combination of defined-contribution and defined-benefit insurance. The federal government would still define a package of required benefits that would constitute comprehensive insurance coverage — the same benefits that Medicare covers today. But each year, private insurers as well as a federal fee-for-service insurance provider (akin to today’s Medicare program) would submit bids to the government to provide that comprehensive coverage at the lowest cost they could manage. The government would then provide seniors in each region of the country with a premium-support payment equal to the second-lowest bid in that region or to the bid of the federal fee-for-service option, whichever was lower. That way, every senior would be guaranteed to have at least one comprehensive coverage option that cost no more than the premium-support payment he received (and thus involved no more out-of-pocket costs than Medicare does today), and would also have other options that cost more (whether because the offering companies could not manage to be as efficient in working with their provider networks or because they offered more benefits than the required minimum and thus charged a higher premium).

The market itself, rather than Medicare’s administrators, would set the level of each year’s premium-support payment, which would ensure that the payment was sufficient to pay for comprehensive coverage. A senior who chose a plan that cost less than the premium-support payment would get to keep the difference (deposited into a tax-free health savings account to use for future out-of-pocket health costs), and a senior who chose a plan that cost more than the premium-support payment would pay the difference out of his pocket. Poorer, older, and sicker seniors would get somewhat higher premium-support amounts than the rest.

Of course, the media and the rest of the left will say this means that the evil Republicans are trying to “take away senior’s Medicare.” Maybe they’ll even update their Paul Ryan-look-alike throws seniors of a cliff ad.