Paul Ryan wants to repeal Obamacare and turn Medicare into a voucher program because he thinks exposing families to the true cost of medicine will slow the growth of health care. But in his rush to kill Obama's legislative opus, he might be overlooking a surprising way the two plans are similar: They're both designed to expose consumers to the true costs of health care, starting in the 2020s.
Ryancare: In a nutshell, Ryancare phases out Medicare to expose consumers to the true costs of health care. Under Ryancare, the government would send seniors a voucher equal to the amount that we're projected to pay for the typical Medicare recipient in 2022. Every year after 2022, the voucher's value would increase at the pace of the consumer price index -- considerably slower than the typical growth of health care spending. As government pays for a smaller share of health care, families will bear greater exposure to health costs. Conservatives hope that if we expose patients to the true costs of health care expenses, they'll be more frugal about treatments.
Obamacare: In a nutshell, Obamacare phases in a network of regulated insurance exchanges -- essentially, a simple market for federally approved insurance plans -- where consumers can shop for coverage with federal subsidies. In 2020, these subsidies come from two places. First, you can get subsidized health care through your employer. Second, you can get subsidized health care directly from the government if you're low income and buying care on the exchange. But in the next decade, both subsidies get the squeeze. Employer insurance plans will face an expanding excise tax, and the subsides for lower-income Americans are indexed to grow slower than anticipated health inflation. As families across the country are exposed to health care costs (sounding familiar?) they're encouraged to hop into the exchanges to buy cheaper insurance plans. Thus, the U.S. health care system could slowly move from an employer-based system with huge subsidies to an exchange-based system with smaller subsidies.
The political downfall of Ryancare (for the elderly) and Obamacare (for the rest) is that each envisions a cap on catastrophic coverage. What happens when an grandmother needs a transplant and she's exhausted her voucher in May? What happens when a single father needs heart surgery and his cheapo insurance plan won't cover him? I expect we'll have the health care debate all over again, only this time it won't be about government be too generous; it will be about Washington being too parsimonious.
One not-unlikely scenario outlined by Ross Douthat sees Washington putting a catastrophic coverage cap on top of the subsidized health care industry. Families would bear a larger portion of their day-to-day medical costs, but Washington would pick up the really big bills. (There are a thousand problems with this scenario, too. A government seen as the decisive arbitrator over end-of-life decisions sounds sort of scary.)
That point is not that a low-subsidy-with-a-catastrophic-cap plan is ideal, much less workable. The point is Ryan doesn't have a monopoly on the idea that families need more skin the game of health care spending. But his budget does have a monopoly on the idea that we need to dismantle Medicare to get consumers to show more skin.
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