NOW that Republican presidential candidate Mitt Romney has named U.S. Rep. Paul Ryan as his running mate, Ryan's proposals for reforming Medicare are front and center. That's as it should be. Medicare impacts a significant share of the population. The Kaiser Family Foundation shows 607,465 Oklahomans were enrolled in Medicare in 2011.
So how would Ryan's reforms affect those Oklahomans? They wouldn't. Ryan's proposals affect only those younger than 55; current beneficiaries would see no change.
What about those below age 55, a group comprising around seven of 10 Oklahomans? According to the Bipartisan Policy Center, Ryan's budget included two major changes for those Medicare eligible in 2023 or later. First, his plan gradually increases the eligibility age for Medicare to 67 in 2034. More importantly, Ryan's budget introduces competitive bidding into the system, something previously embraced by several Democratic policymakers.
When the under-55 set retires, they'd get a premium-support payment and could choose between traditional fee-for-service Medicare and various private health care plans. So even those younger than 55 will still have the option of “Medicare as we know it.” But they also would enjoy greater consumer choice and control.
A 2012 American Enterprise Institute report determined that by reducing the overpayments that plague the system, competitive bidding could save Medicare $339 billion over 10 years “while maintaining basic benefits and without raising taxes.” It predicted the reform would keep premiums stable for most beneficiaries. The report noted that competitive-bidding reforms could increase prices for a subset of Medicare beneficiaries, although those citizens would be able to change plans and save money.
The potential program savings are important, because Medicare's expenditures have exceeded income every year since 2008. Medicare's hospital trust fund is expected to become insolvent by 2024, just 12 years from now. Even that troubling estimate is based on some questionable assumptions. Forbes columnist Avik Roy notes the 2024 date assumes Medicare's reimbursements to doctors will be cut by 31 percent on Jan. 1, 2013. If Congress approves a “doc fix” to maintain provider payments, the system goes broke much faster. If not, fewer doctors will treat Medicare patients.