A (Very Brief) Comparison of Romney and Obama on Medicare

Speaking of Medicare, one of the problems with covering the current debate is that it hasn’t been easy to figure out what the candidates’ positions actually are. Paul Ryan has a plan, but Mitt Romney initially said that his campaign’s plan was different. Today he said it’s pretty much the same, aside from the Obamacare cuts that Ryan adopted in his plan but Romney promises to repeal. Barack Obama, as best I can tell, doesn’t have a plan at all. He’s got Obamacare, which has already made changes to Medicare, but he doesn’t really have anything new going forward.

If this is now the playing field — and I think it is, though I’m not 100% sure — then the two plans on offer are:

  • Obamacare’s existing changes to Medicare
  • Paul Ryan’s plan minus the Obamacare cuts

Roughly speaking, here’s Obamacare:

  • Reduces payments to private Medicare Advantage programs that have been costing the government about 20% more than standard Medicare. More here and here.
  • Cuts reimbursement rates to doctors and hospitals. More here, but keep in mind that the effect will be small if private insurers follow Medicare’s lead and also reduce reimbursement rates.
  • Institutes the IPAB advisory board to recommend cost-saving measures. More here.
  • Encourages a switch from fee-for-service (doctors get paid a flat rate for every procedure they perform) to a more quality-oriented reimbursement system.
  • Caps overall Medicare cost growth at GDP + 0.5%.

And here’s Ryan’s plan:

  • Caps overall Medicare cost growth at GDP + 0.5%.
  • Requires providers to bid competitively for Medicare business based on a minimum guaranteed service level. Standard fee-for-service Medicare would be one of the bidders. A primer on competitive bidding is here.
  • Medicare recipients get a voucher equal to the second lowest bid. They can use this to buy insurance, or they can pay more if they want to buy a more comprehensive plan. More here.
  • This applies only to people under 55. There would be no changes to Medicare for anyone older than that.

So which do you like better? A plan that reduces reimbursement levels and relies on top-down control/encouragement to produce more cost-effective medical care? Or a plan that relies on competitive bidding to keep costs under control? The choice, for both liberals and conservatives, is not as simple as you might think. Conservatives need to acknowledge that, like it or not, cost controls have a proven track record and that Obamacare’s top-down programs really might help improve the efficiency of healthcare delivery. Liberals need to acknowledge that those top-down controls aren’t a sure thing and that competitive bidding might make a real difference.

There are lots of details I’ve left out, including spending on other healthcare programs, such as Medicaid and CHIP. But at a 10,000-foot level, this is the basic state of play.

UPDATE: Via email, Austin Frakt points out that in a sensible world you could actually combine both of these plans: keep the Obamacare changes to standard Medicare, but let other providers bid against it. More here. Needless to say, we don’t live in such a sensible world.


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