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Multiple-Choice Mitt on Medicare

[guest post by Darius Tahir]

Last Friday Mitt Romney laid out a plan to reform Medicare, as part of a broader fiscal framework. And he appeared to call for fairly dramatic changes, although it’s difficult to be sure. He was pretty vague about the details, making it possible to take away some pretty different interpretations – as a quick read of the online commentary shows.

On Medicare, Romeny started his speech with what has become his familiar attack on President Obama, blasting him for being the “only president in modern history to cut Medicare for seniors” and for “put[ting] the future of Medicare in the hands of 15 unelected  bureaucrats.” He then reiterated his pledge not to reduce the program’s liabilities with tax hikes, “We couldn’t tax our way out of unfunded liabilities so large, even if we wanted to.”

But wait a minute. If you’re not going to control costs the Obama way, and you’re not going to raise taxes, how are you going to make the program sustainable? Romney’s plan it to offer seniors a voucher, with more support going to lower-income seniors; seniors could use the voucher to buy an insurance plan, of which traditional Medicare would be one of the choices. Medicare would compete with private insurance that provides “at least the same level of benefits.”

According to Romney, that plan would increase competition and innovation between payers and, as a result, bring down costs, as seniors opted for cheaper options – pocketing the difference between the government’s contribution and the cost of the plan). Romney also proposed to raise the eligibility age for Medicare, in order to keep pace with rising longevity.

Feel like you’ve heard something like that before? You have – from, among others, Paul Ryan. Ryan’s plan also calls for a voucher. Sure enough, conservatives seemed pleased by the plan, while Ryan himself proclaimed in a Washington Post interview that the plan is a “great development.” It shows that “the elusive adult conversation is taking place, all on one side,” Ryan said. He also argued that the plan looks like the House GOP budget plan – that is, his plan –  with the exception that Romney would still give seniors the option to buy into Medicare. Ryan said that was ok, however, as long as the government capped the value of the voucher, so as to reduce the deficit.

Reihan Salam of the National Review was also pleased, but offered a different interpretation. Salam liked the way the plan envisioned using competition among plans, including Medicare, to lower costs. But he thought Romney’s difference with Ryan was more than incidental, because Romney imagined the value of the voucher rising or falling based on those bids. This wasn’t just a straight cap, like Ryan wanted – and that meant seniors wouldn’t be saddled with as much financial risk as they would under the Ryan plan.

Who’s right? It’s not entirely clear – which is one reason that Austin Frakt calls Romney’s plan “vague and inconsistent.” He says that “the whole ballgame” is in whether the Ryan vision or the Salam vision is followed. Frakt also wonders about the effects of raising the eligibility age. As you kick out relatively younger beneficiaries, he says, the remaining pool becomes older and thus sicker and more expensive – meaning the government would have to keep shoveling more money at it to keep it competitive. That’s not likely to make the program sustainable.

But there’s yet another way to look at the Romney plan. It comes Ezra Klein, writing in Wonkbook this morning. Since the plan basically calls for giving people the option of enrolling in private insurance or a government-run option, Klein argues the Romney plan is really reviving the public option. And while Romney didn’t propose making that option available to everybody, if it worked for Medicare, “the pressure to open the revamped, semi-privatized Medicare program up to younger and younger Americans will be immense.”

Confused? Well, that may be what Romney has in mind. A little uncertainty makes it easier for people to see what they want in the plan – and harder for critics to attack it.