Cost-Shifting Is the Core of Paul Ryan’s Social Programing Proposals

Before the 2004 elections, Rep. Paul Ryan proposed a plan to privatize Social Security and then lobbied President Bush to make it a policy priority in his second term. Bush adopted a more modest privatization plan and then abandoned it due to strong public opposition. Appartently burned by that experience, Ryan has left Social Security out of his current plan to transform  Medicare and Medicaid. Cost-shifting is the core of his plan.

Although the Romney-Ryan team is accusing President Obama of cutting $716 billion from Medicare benefits over 10 years, Paul Ryan has the same $716 billion in his own plan. The difference is that Obama would use some of the savings to extend the life of Medicare, close part of the Part D drug prescription “donut hole,” and add preventive care for all beneficiaries, while the Ryan plan lacks similar provisions.

The Ryan plan would give Medicare beneficiaries a choice between staying in the Medicare program or getting vouchers to buy their own insurance. In regard to Medicaid, each state would get an annual pot of money to cover  Medicaid costs. What this means is that any difference between Medicare costs and money to pay would be made up by the Medicare beneficiary; moreover, any shortfalls between Medicaid expenses and the state’s initial pot of money would be made up by the state itself. Thus, the Ryan plan does not reduce the overall cost of healthcare spending: costs are shifted to beneficiaries and states.

There is an additional problem with vouchers: it is highly likely that many voucher holders will purchase insurance with sub-par coverage. Much of the focus on healthcare coverage has been on those without health insurance, yet there are tens of millions who have health insurance that insurance experts consider inadequate.


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