Is Ryan's medicare plan the same as that of the Congress? Rush Limbaugh got it wrong
I was listening to Rush Limbaugh today when he got a call from a woman who said that the republicans need to counter the democrat claims that Ryan's medicare plan is radical by pointing out that it is the same plan used by the congress. Rush said he didn't know that but after the break came back and said that it was true and cited an article in the New York Times. I then sent him an email saying that it was not the same plan. But just like in the earlier email I sent him telling him that the great recession was not caused by subprime mortgages and the government forcing the banks to make loans to people who couldn't repay, he will probably ignore this one as well (see http://www.adisgruntledrepublican.com/2009/03/are-cra-clinton-and-carter-really-to.html).
What Ryan said in his Wall Street Journal op ed piece on April 5, 2011 was that his plan was similar as that of the congress (http://online.wsj.com/article/SB10001424052748703806304576242612172357504.html). However it is not identical. Ryan's plan calls for people to opt either for the current medicare plan or for a voucher of a fixed initial amount that grows with the CPI. The plan for the congress is not indexed to the CPI but rather to the average change in private insurance premiums (see http://economix.blogs.nytimes.com/2011/04/18/comparing-ryans-medicare-plan-to-what-congress-gets/). This is an important distinction. Much like college tuitions growing faster than the CPI because of increases in federal funding, Ryan's plan would spiral out of control as insurers would be able to jack up their rates with impunity. Of course, it would make sense if everyone were placed under the same plan adjusted to either the CPI or the wholesale price index. The reason why it would not be linked to the insurance average is that the government would then be motivated to place some sort of price control mechanism on the insurance companies. As has been shown repeatedly, this type of government interference in the market will result in distortions that do more harm than good. The question is whether even the republican dominated House would enact a change to their program to conform to that which Ryan wants to give the public as one of its choices?
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com