In selecting Paul Ryan as his running mate, Republican presidential candidate Mitt Romney has taken the unusual step of embracing a man whose deficit-reduction plan is far more detailed than his own.
When questioned on his own plans, Romney often refers reporters to his website and his multi-point plan for getting the economy back on track. Many of those plans are just an endorsement of broad concepts, however.
That’s not the case with Ryan, a seven-term Wisconsin Republican who’s the chairman of the House Budget Committee. His deficit-reduction proposals include revamping Medicare, and that’s made some Republicans uncomfortable, in part because anything that tinkers with benefits for seniors is often tantamount to political suicide.
Concerned about potential blowback from his pick, the Romney campaign aired a new ad Tuesday that says Romney’s plan would protect Medicare and accuses President Barack Obama of slashing Medicare spending through his health care law. That’s a misleading reference to 165 provisions of the Affordable Care Act that would spend $500 million to $700 million less over the next decade through reduced payments to providers and other provisions.
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Medicare is the government insurance program for the elderly and people with disabilities. Last year it covered 48.7 million Americans and had expenditures exceeding $549 billion. As baby boomers, born from 1946 to 1964, hit retirement age, they’re expected to overwhelm Medicare.
Even before Romney selected his running mate, his website touted Medicare-restructuring ideas similar to Ryan’s. Both men support the idea of giving future retirees a fixed amount of money and letting them choose whether to spend it in traditional Medicare fee-for-service programs or use it to buy private insurance.
This private insurance would work off a Medicare exchange, much like the state health care exchanges for today’s uninsured envisioned in the law signed by President Barack Obama and derided by Republicans as Obamacare.
Where Romney and Ryan differ, and presumably must reconcile, is in important details, such as how payments for beneficiaries would grow over time as prices rise. Ryan favors capping the per-beneficiary payments to seniors at 0.5 percentage point above the growth rate of the economy. Late last year, he favored a more generous rate of 1 percentage point above economic growth.
Romney is silent on this key detail.
“Mitt continues to work on refining the details of his plan, and he is exploring different options for ensuring that future seniors receive the premium support they need while also ensuring that competitive pressures encourage providers to improve quality and control cost,” the Romney website said. “His goal is for Medicare to offer every senior affordable options that provide coverage and service at least as good as what today’s seniors receive.”
Ryan’s plan is much more detailed. With broader budget-deficit reduction as the goal, Ryan’s plan would revamp Medicare through a voucher-like program called premium support that would give seniors lump sums that they could use to buy health insurance. In addition to capping the percentage by which Medicare costs could grow, Ryan would raise the eligibility age for Medicare from 65 to 67.
Critics of Ryan’s plan, mostly Democrats, argue that there are insufficient guarantees that caps on benefits wouldn’t simply become a way of transferring most costs to the elderly. But with Medicare’s trustees projecting in April that the program’s trust fund will go broke as early as 2024, liberals and conservatives agree that Medicare growth threatens to overwhelm all other government spending.
“Medicare cannot sustain itself as it is now, and I don’t know any nonpartisan person who believes it can,” said Steve Bell, a senior researcher at the nonprofit Bipartisan Policy Center, a group that’s proposed its own deficit-reduction plan, which also includes capping the growth rate of Medicare benefits.
Whether Ryan’s “Path to Prosperity,” as his budget plan is known, is the right idea or not, he’s put one out for public debate. His selection on the ticket ensures that Medicare will be a key area of debate.
“The Romney plan has been pretty vague, so it’s hard to say how much of it is the same as Ryan’s,” said Bob Bixby, the executive director of the nonpartisan Concord Coalition, a budget watchdog group. “I would just assume that Romney’s plan is Ryan’s plan.”
There’s little reason to pick Ryan as a running mate if you aren’t choosing his detailed deficit-reduction plan with the Medicare centerpiece, Bixby said.
“Paul Ryan is on the ticket because of his budget,” he said. “Without Paul Ryan’s budget, he would not be a credible pick.” It’s implausible to think Romney would have selected Ryan “without being pretty much on point with his budget,” Bixby said.
Bell of the Bipartisan Policy Center says that others have proposed plans similar to Ryan’s, including two liberal Democratic researchers, Henry Aaron and Alice Rivlin of the Brookings Institution, two decades ago. The ideas of competition and capping the growth rate of Medicare benefits have been the centerpieces of other efforts to revamp the program that failed in Congress.
Indeed, Bell said that most deficit-reduction plans offered in recent years had included some component of what today was called the Ryan plan.
In an opinion-page article in Tuesday’s New York Times, David Stockman, who was President Ronald Reagan’s budget director, dismissed the Ryan plan as a “fairy tale” that doesn’t go far enough.
Calling the plan phony because it defers “changes to social insurance by at least a decade,” Stockman, who resigned from the Reagan administration because of its yawning deficits, argued for tougher measures that surely would anger the key voting bloc of seniors.
“A true agenda to reform the welfare state would require a sweeping, income-based eligibility test, which would reduce or eliminate social insurance benefits for millions of affluent retirees,” Stockman wrote. “Without it, there is no math that can avoid giant tax increases or vast new borrowing. Yet the supposedly courageous Ryan plan would not cut one dime over the next decade from the $1.3 trillion-per-year cost of Social Security and Medicare.”