Rhetoric Aside, Both Sides Favor Medicare Limit

Despite fierce campaign rhetoric, one business commentator says President Obama and GOP challenger Mitt Romney largely agree Medicare needs to go on a spending diet.Medicare has emerged as a defining issue in this year's presidential campaign, but one iconoclastic commentator says President Obama and his GOP challenger Mitt Romney actually agree more than they disagree on what to do.

Matthew Yglesias, who covers business and economics for Slate, says despite fiery campaign rhetoric, both sides have committed to putting Medicare "on a diet." How they would shrink Medicare spending differs, Yglesias says, but that difference pales in comparison to their agreement on imposing a finite spending limit on one of America's most popular entitlement programs, which expands as medical costs rise.

Romney and his new running mate, Congressman Paul Ryan, have ignited a fierce political debate over Medicare because of Ryan's congressional budget proposal to privatize Medicare by giving senior citizens medical vouchers. The amount of those vouchers, Yglesias says, would be limited by a cap on Medicare spending growth equal to annual GDP growth rate plus 0.5 percent.

Obama has blasted the Ryan voucher plan, predicting it would "end Medicare as we know it." However, Yglesias says Obama in his 2013 budget proposal also seeks to limit growth in Medicare spending, using the same formula as Ryan.

The difference is how Obama and Romney/Ryan would wring out savings in Medicare. Yglesias says Obama's plan relies on "aggressive bureaucratic management" on what Medicare will pay for and how much it will pay. He notes this is how foreign nations with universal health care insurance coverage seek to control costs.

The Romney/Ryan plan would rely more heavily on the market to ration services under Medicare. Yglesias comments that, while the Obama approach has been validated in other countries, the Romney/Ryan plan amounts to a "leap of faith in the power of the private sector."

One other major difference, which Oregon Senator Ron Wyden has pointed to, is the fate of the Affordable Care Act. Romney wants to repeal it, which Wyden said would endanger health care delivery innovations seeking to coordinate care, focus on treatment outcomes and help to curb spiraling price increases.

Yglesias speculates that seniors covered by a Medicare system subject to spending controls may not recognize much difference in how the two approaches affect them. "From a patient's point of view," he says, "they might end up looking pretty similar."

"Under Ryan's plan, the poor will be left with bare-bones plans and more affluent seniors will either pay higher premiums to get more deluxe plans or else pay out-of-pocket for non-covered services," Yglesias explains. "Under Obama's approach, the poor will be left with bare-bones Medicare and more affluent seniors will either buy separate supplemental insurance plans or else pay out-of-pocket for non-covered services."

While partisans on both sides may focus on the contrasting faiths in either the private sector or bureaucratic control, Yglesias says both approaches will rely on "effective central planning." "To make the vouchers work," he says, "regulators need to adjust the value of each person's voucher for age and health status and need to define a minimum acceptable benefits package." Yglesias adds that competent regulators could probably work in a private or government setting.

What seems inevitable to Yglesias is that "seniors will face the novel situation of potentially being denied useful medical treatment on the grounds that Medicare can't afford to pay for it." It won't matter, he concludes, who wins the race for the White House this fall.