Medicare Part IV: Medicare’s Best Path Forward

August 24, 2012 J

By: Nicole Kaeding

This week, Americans for Prosperity has outlined the two competing plans for redirecting Medicare’s unsustainable path: President Obama’s and Congressman Ryan’s. Both plans extend the trust fund’s longevity, but they attack the issue in very different ways. The President’s plan consolidates power in the hands of bureaucrats, while Congressman Ryan’s plan puts it back into the hands of seniors.

President Obama’s plan takes $716 billion from the Medicare trust fund as the primary funding vehicle for his federal health care takeover. Due to the crazy budgeting rules in Washington, these spending decreases also increase the duration of the Medicare trust fund to 2024. However, even Medicare’s chief actuary admitted in testimony to Congress that the President’s changes were double counted.

To make matters worse, the President’s plan creates a new board of 15 unelected, unaccountable bureaucrats to oversee further Medicare growth. These health care bureaucrats will have power like the Internal Revenue Service, accountability like the United States Postal Service, and compassion like a government accountant. Their decisions will carry the force of law within only a few months and can only be overturned with a super-majority vote in Congress; an unprecedented transfer of power. In the words of former Budget Director Peter Orzag, this will be “the single biggest yielding of power to an independent agency since the creation of the Federal Reserve.”

The President finalizes his plan by adding nearly $300 billion in new tax increases from January 1, 2013 through the end of the decade. The tax increases will first hit the so-called “rich,” those making more than $200,000 a year. However, the health care law does not tie those brackets to inflation meaning more and more individuals will be affected.

For comparison, Congressman Ryan uses the same $716 billion in Medicare savings to further support the Medicare trust fund. The trust fund is stable until 2024 and the money is not spent elsewhere. Double counting doesn’t occur under this plan.

Ryan’s plan also pivots from restrictive bureaucratic control to one of choice for seniors. Under Ryan’s plan, starting in 2022 seniors has the ability to choose their health insurance plan under Medicare. Plans will advertise, innovate and compete for health care dollars controlling costs and increasing quality. Furthermore, unlike the President’s health care law, Ryan’s plan has bipartisan support. He co-authored his plan with Democratic Senator Ron Wyden of Oregon.

It’s easy to compare the two plans, since they both use the same savings and both plans grow at the same rate in the future. However, there remain several key differences between the two. Individuals must decide who should have control of seniors’ health care decisions: bureaucrats or seniors.

For the rest of AFP’s series on Medicare, check out the following posts:

Part I: What is Medicare?

Part II: President Obama’s Medicare Plan

Part III: Congressman Ryan’s Medicare Plan

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