I’m a little late to this particular party (I’m still in Canada, for my last theatrical jaunt northward of the summer), but I just wanted to chime in to say: neither the Obama nor the Romney campaign’s Medicare attacks entirely make sense. If you just look at the question of bending the cost curve, the competing plans have more in common than not. Moreover, the Romney-Ryan approach (if we assume it will be based on the most recent Ryan plan) specifically depends on something like ACA the function at all.
The two main mechanisms in the ACA that are designed to bend the cost curve are: the tax on “cadillac” insurance plans, and the reductions in future reimbursement rates to health-care providers under Medicare. The former raises revenue, but also creates an incentive to structure private insurance so that it doesn’t run afoul of the tax, and therefore creates an incentive not to cover some “unnecessary” treatments, or find less-expensive alternatives to treatments that are necessary. The latter forces providers to find ways to continue to function with less revenue per patient, whether that means slimming down administrative expenses or reducing salaries of providers or changing the treatment mix or whatever. Will those changes mean “worse” coverage? On some level, the answer has to be: “of course.” You can’t reduce spending and simply assume that there will be no negative impact on treatment – the goal isn’t to maximize treatment options, it’s to reduce cost while minimizing any negative impact on treatment. Obviously, the hope is that a lot of necessary restructuring can be done with very little impact on patient care – maybe as little as none. In that case, the net gain to public health would be enormous, as those freed-up resources are redeployed to areas of much greater need (e.g., the uninsured). Which is the idea.
Turning to the Republican alternative, assuming we can use Representative Ryan’s latest plan as a basis for what a Romney Administration would support, what that plan does, basically, is provide future Medicare recipients with an option to shift to a “premium support” model, where they would get a voucher for use to purchase private health insurance. Of course, the problem with purchasing private health insurance is that if you let insurers underwrite individual policies, they will select against the people who need coverage most. You can deal with that by mandating that insurers not do an individual underwriting, but then they will assume that they are getting a negatively-biased sample, and underwrite based on a very negative patient profile. This, in turn, drives costs way, way up. The ACA’s solution to this problem is to mandate that everyone participate in the insurance pool. You don’t have to do exactly this, but you have to do something similar if you want to provide health insurance widely through individual relationships with insurance companies, and that’s what Ryan’s plan intends. So in a very fundamental sense, it depends on the existence of something like the ACA’s mandate to function properly.
And when we look at cost containment, we see that Ryan’s plan approaches the question in a very similar way to the ACA. It imposes a budget on traditional Medicare (which is retained as an option for seniors), which would force HHS to find ways to reduce costs if they did not drop naturally on their own. The most plausible mechanisms for such are the kinds of things already included in the ACA. The value of a voucher would also be held down, so the other possibility is that private insurers would find ways to reduce costs that the government would not find. I’m inclined to favor competition for precisely that reason, but the fact remains that the kinds of things private insurers would have to do are essentially the same kinds of things the government would be doing: reducing reimbursements and/or changing the coverage mix.
Introducing private insurers would gain you the benefit of multiple perspectives on the problem, and the incentives of the profit motive in a competitive marketplace. On the other hand, you’d have introduced a new layer of cost (the insurers’ need for profit) and each insurer would have less leverage to negotiate fees than the government does. That’s a meaningful debate to have, but it’s basically a peripheral one because under both the ACA and Ryan’s proposal, the way you hold down Medicare’s costs is by setting a budget and refusing to spend more. And in both cases the way you make that promise good is by changing the coverage mix or forcing providers to accept less in reimbursements, thereby pushing the problem of cost-containment downstream.
I don’t view this as a problem with either plan. Putting Medicare on a budget is, indeed, the only way to control costs. It’s also what every other developed country in the world does. In a rational world, both parties would agree on this, and we’d move on to the other parts of the debate. In our world, both campaigns are accusing each other of gutting Medicare.
That’s not to say that there are no important differences between their approaches. The Republicans do propose gutting a government health-insurance plan – they plan on gutting Medicaid, which benefits the poor and near-poor. This is also the form of insurance that the ACA expanded substantially. But I don’t expect this to be the main focus of the Obama Administration’s attacks, because the politics of our time are the politics of scarcity.