Globe Editorial

Ryan’s Medicare plan is unfair — but at least he has one

House Budget Committee Chairman Paul Ryan’s plan tackles the cost of Medicare. House Budget Committee Chairman Paul Ryan’s plan tackles the cost of Medicare. (Associated Press)
April 6, 2011

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ACCORDING TO the traditional rules of Washington, House Budget Committee Chairman Paul Ryan has painted a huge bull’s eye on himself by suggesting a specific way to bring down the long-term costs of Medicare. The crowning achievement of 1960s liberalism, the single-payer health care program for senior citizens has become so popular that, during last year’s health reform debate, Tea Party activists were spotted demanding, “Keep your government hands off my Medicare.’’ So for President Obama, the politically expedient thing would be to accuse the GOP of trying to impoverish the elderly, and demand that all potential Medicare cuts be taken off the table.

But Obama knows better. Looming Medicare costs will become an enormous financial problem for the nation, and may already be putting pressure on the government’s ability to borrow. A far better response to Ryan’s plan would be to point out its flaws, which are significant, but also to offer an alternative that acknowledges the underlying problem but provides a gentler fix.

As baby boomers retire, Medicare costs will spiral. Medicare administrators could help by cutting fees for certain treatments, opting not to pay for others, or scrapping the fee-for-service model entirely and compensating doctors and hospitals in a completely new way. But in practice, those who pursue such changes are likely to come under intense pressure from industry groups and face scaremongering about “death panels.’’ So in theory, Ryan’s far-reaching proposal to offer vouchers that Medicare recipients could use to buy private insurance could make a certain amount of sense.

Except for one thing: Private insurers have done an abysmal job of keeping costs down for people under 65. For that reason, the bulk of any savings from Ryan’s plan would have to come from exposing Medicare patients to a much larger portion of the cost of their care. While some ratcheting-down of benefits may be inevitable, Ryan’s plan would be extreme — particularly if Republicans also expect to lower federal tax rates, as Ryan insists they will.

Yet Republicans’ insistence that tax rates can keep on falling even as the population ages is only an article of faith, and Ryan’s failure to take a more realistic position undercuts the integrity of his plan. Medicare can’t be spared all cuts, but raising taxes somewhat — most heavily on taxpayers who’ve benefited most from the growing concentration of wealth in America — is also vital to preserving the safety net for older Americans.

The idea of altering future benefits is galling to Democrats, and rightly so, at a time when hedge-fund managers still have their earnings taxed at a discount rate. And yet the two parties can’t wait until every last inequity is banished from the tax code, and every discretionary government program is sacrificed on the altar of deficit reduction, to have an adult conversation about entitlements. Ryan deserves credit at least for putting a plan on the table. Now it’s Obama’s turn.