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Paul Ryan: No to Obamacare Exchanges, Yes to Medicare Exchanges

March 22, 2015

Monday, March 23 isn't just the fifth anniversary of the signing of the Affordable Care Act. The day also marks five years since then Senate Minority Leader Mitch McConnell (R-KY) promised the GOP response would be "'repeal and replace,' 'repeal and replace.'" But with the possibility that a Supreme Court ruling in the King v. Burwell case could soon end health insurance subsidies for millions of Americans in the 34 states that chose to use the federal exchange, the GOP still has no replacement.
That makes Paul Ryan's message to the affected states not to establish their own exchanges doubly ironic. After five years of GOP failure to live up to its "repeal and replace" pledge, why should they trust Ryan's promise of a new Republican health care plan by June 20? Just as cynical, the Obamacare exchange model the House Ways and Means Committee chairman continues to criticize is essential to the Medicare voucher scheme Paul Ryan has been pushing for years.
Of course, you'd never know that from Ryan's recent public statements. As the Wall Street Journal reported Friday, "Rep. Paul Ryan urged state lawmakers to resist setting up state insurance exchanges if the Supreme Court rules that key parts of the Affordable Care Act can only continue if they do so."

"Oh God, no...The last thing anybody in my opinion would want to do, even if you are not a conservative, is consign your state to this law," the Wisconsin Republican told state legislators Thursday during a conference call organized by the Foundation for Government Accountability, a conservative think-tank. The foundation provided a recording of the call...
Mr. Ryan, chairman of the House Ways and Means Committee and the GOP vice presidential nominee in 2012, asked the state legislators to hold firm and promised them congressional Republicans would have alternative health-care legislation--with an official cost estimate--introduced by June 20. The bill, he said, would revive lower-cost, limited coverage insurance plans in states that didn't want their own exchanges. Currently, 37 states use
"If people blink and if people say this political pressure is too great, I'm just going to sign up for a state-based exchange and put my constituents in Obamacare, then this opportunity will slip through your fingers," he said.

But when it comes to his Medicare privatization scheme to dramatically shift health costs onto future seniors, that is precisely what Paul Ryan wants to do. As I noted back in the fall of 2013, Ryan needs the exchange model to work almost as much as any Democrat. As Ezra Klein first explained two year before, the voucherization of Medicare contained in Ryan's "Path to Prosperity" blueprint and the GOP budget based on it requires Medicare exchanges:

The current Medicare program is completely dissolved and replaced by a new Medicare program that "would provide a payment - based on what the average annual per-capita expenditure is in 2021 - to purchase health insurance." You'd get the health insurance from a "Medicare Exchange", and "health plans which choose to participate in the Medicare Exchange must agree to offer insurance to all Medicare beneficiaries, thereby preventing cherry picking and ensuring that Medicare's sickest and highest cost beneficiaries receive coverage."
Sound familiar?

Familiar, indeed. Alice Rivlin, who worked on Ryan's first version of the voucher, later confirmed to Klein that the idea was almost identical to the Affordable Care Act:

If Ryan-Rivlin will unleash ferocious innovation that holds costs down, then so too should the Affordable Care Act. So at the end of our conversation, I asked Rivlin, who supported PPACA, if I was missing something. She laughed. "I keep talking to Paul and trying to convince him of that," she said. "But even if he agreed with me, he couldn't say so."

Of course, Rep. Ryan also couldn't publicly say that his underfunded voucher scheme would inevitably lead to rationing as costs were shifted to seniors often unable to pay them. Sadly for Ryan and the 95 percent of Congressional Republicans who voted for his budget, the Congressional Budget Office could. By 2030, CBO concluded Ryan's plan would cost seniors an extra $6,500 a year on average, with beneficiaries on the hook for 68 percent of their health care expenses. While the2012 and 2013 versions of the Ryan plan (which would continue traditional government insurance as one "public option" for seniors buying a Medicare plan with their subsidy) would not be as painful, the same cost-shifting dynamic remained.
And where will future seniors obtain their new Medicare coverage? As Ryan's 2013 "Path to Prosperity" document explains:

To strengthen the Medicare program to serve the needs of both current and future retirees, the budget would reform the Medicare program and put it on sound financial footing for generations to come. For those workers currently under the age of 55, beginning in 2023, those seniors would be given a choice of private plans competing alongside the traditional fee-­‐for-­‐service option on a newly created Medicare Exchange. Medicare would provide a premium-­‐support payment either to pay for or offset the premium of the plan chosen by the senior.
The Medicare Exchange would provide seniors with a competitive marketplace where they could choose a plan the same way members of Congress do. All plans, including the traditional fee-­‐for-­‐service option, would participate in an annual competitive bidding process to determine the dollar amount of the federal contribution seniors would use to purchase the coverage that best serves their medical needs. Health care plans would compete for the right to serve Medicare beneficiaries.

So far, Obamacare has been very successful at slowing the growth in health care costs as consumers 64 and under choose from a growing number of private insurance plans on the ACA exchanges. Like most in his party, Paul Ryan wants to bring that to an end. Instead, he wants to use pretty much the same process to let millions of the oldest, sickest and costliest patients to select private alternatives to government coverage.
In Medicare exchanges.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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