View Full Version : Medicare Reform: Who Decides?

07-16-2011, 01:01 PM
By Avik S.A. Roy from the July/August 2011 issue

In an ordinary environment, it is nearly impossible for Americans to conduct a reasoned discussion about Medicare. And entitlement reform remains fraught with political peril, as the recent special election in New York has shown: Democrat Kathy Hochul defeated Republican favorite Jane Corwin, in a campaign dominated by Hochul's attacks against Republican plans for Medicare. But it is no longer possible to avoid the truth. Medicare is bankrupt, and if we donít make gradual but significant changes to it, the program will end America as we know it.

On a per-capita basis, Medicare spending is growing faster than the economy. On top of that, the Baby Boomers have started to retire: in 2031, when the last of the boomers reach age 65, there will be 77 million people on Medicare, compared to 47 million today. No tax increase would be large enough to keep up with the growth in Medicare spending, and so controlling spending is the only way out.

What gets lost in the debate about Medicare is that both Democrats and Republicans know that Medicare is broke, and responsible members of both parties have proposed plausible reforms of the program. Indeed, both Obamacare and the 2012 GOP budget authored by Paul Ryan would impose comparable reductions in the growth of Medicare spending. Where the president and Rep. Ryan differ is less in the "how much," and more in the "how." Put simply, the Obama approach puts government experts in charge of controlling costs, and the Ryan approach hands more control to individual seniors.

What does this mean in reality? How will these abstract-sounding concepts affect how doctors care for sick patients? Which one is more likely to work? It's worth spending some time on these questions. We can start with the basics of how Medicare works today.