Rep. Paul Ryan has teamed up with Sen. Ron Wyden on a new bipartisan plan to privatize Medicare that would still retain a public option, although the White House rejected the effort Thursday.
The plan relies on health insurance exchanges similar to those created under the new health care law, offering seniors a choice between private plans and a traditional Medicare plan and allowing them to use subsidies to pay for both. It wouldn’t change benefits for those 55 and older. They would, however, be able to purchase private plans on the exchanges beginning in 2022.
With the beleaguered entitlement program projected to reach insolvency within the next decade, the topic became especially touchy for all sides this year when a bipartisan supercommittee charged with finding $1.5 trillion in savings couldn’t agree on what to do with Medicare spending — and just about every other budget category.
The Wyden-Ryan proposal is the first bipartisan attempt to cut the program’s skyrocketing costs by setting up competition between traditional Medicare and private insurance plans, theoretically driving down costs. Mr. Ryan first proposed privatizing the program nine months ago.
“Guaranteeing a future for traditional Medicare is a big challenge and it is our hope that outlining areas where Democrats and Republicans can reach agreement will help Congress rise to that challenge,” said Mr. Wyden, Oregon Democrat.
While Mr. Wyden and Mr. Paul expressed hope that their plan will become a framework for Medicare discussions next year, White House spokesman Jay Carney shot it down, arguing it would undermine the program, causing it to “wither on the vine.”
“At the end of the day, this plan would end Medicare as we know it for millions of seniors. The Wyden-Ryan proposal is the wrong way to reform Medicare,” said Mr. Carney, telling reporters it would raise premiums, forcing many seniors to leave traditional Medicare and join private plans and shift costs from the government to seniors.
House Speaker John A. Boehner of Ohio expressed support for the plan, calling it “a step in the right direction” and seniors advocate AARP was cautiously optimistic, with its vice president, Nancy LeaMond, saying she appreciated the effort even though many of the details were still unclear.
Leading Democratic lawmakers were more critical.
Sen. John D. Rockefeller IV, West Virginia Democrat, opposed the way the plan tries to rein in Medicare costs by allowing Congress to cut provider payments or raise premiums if growth exceeds gross domestic product by more than 1 percent, instead of depending on the controversial Independent Payment Advisory Board created by Mr. Obama’s health care law.
“I have and always will oppose privatizing Medicare,” he said. “This latest Ryan-Wyden plan still leaves seniors vulnerable.”
Rep. Pete Stark, California Democrat and ranking member on the Ways and Means health subcommittee, said the plan “ends Medicare as we know it.”
“If these two get their way, senior citizens’ health coverage will depend on what big insurance offers and what seniors — most of them on modest, fixed incomes — can afford,” Mr. Stark said.
Mr. Ryan came under similar fire last spring, when he outlined a budget plan that called for Medicare to be turned into a system in which seniors would use vouchers to purchase private insurance. While most Republicans strongly supported the plan, Democrats and the While House rejected it.
Under the new Ryan-Wyden plan, private plans that participated in the Medicare exchanges must offer a minimum level of coverage. Payments would be based on the second-least-expensive private plan or fee-for-service Medicare — whichever is cheaper — and seniors purchasing more expensive plans would have to make up the difference.
No serious attempts to introduce the private market into Medicare have been made since 2003, when President George W. Bush wanted to force all of Medicare to compete with private insurers as part of his prescription drug law. Republicans had to give up the sweeping language in order to win passage of the bill, but the legislation did include some less-ambitious pilot programs that were subsequently overturned in last year’s health care law.
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