Curb Medicare Spending the Ryan Way | Michael F. Cannon | Cato Institute: Commentary

Curb Medicare Spending the Ryan Way | Michael F. Cannon | Cato Institute: Commentary: "experience and public choice theory suggest that the Ryan plan has a better shot at reducing future Medicare outlays than past efforts, because the Roadmap would change the lobbying game that fuels Medicare's growth.

Medicare dictates the prices it pays clinicians, facilities, medical suppliers and private health plans through more than a dozen different price-control schemes. Efforts to reduce those prices typically fail because of what Tom Daschle calls the 'patient-provider pincer movement': Medicare enrollees and health care providers join forces to undo those cuts.

Each producer that depends on Medicare for its income faces an enormous incentive to lobby for higher prices. The prices for, say, hospital services could make or break a lot of hospitals. And if the hospitals don't lobby to increase those prices, who will? Enrollees like the easy access to medical care that comes with higher Medicare spending."

"The Roadmap, in contrast, would substantially diminish each producer group's incentive to lobby for greater subsidies."

"If hospitals lobby for a higher voucher growth rate, how will they know that the added subsidies will come back to them, rather than ambulatory surgical centers? Many groups would just free-ride on the lobbying efforts of other groups."

"A voucher system would also put downward pressure on prices across the entire spectrum of care."

"Seniors spend their Social Security checks on lots of things, but we don't see golf courses or metal-detector manufacturers lobbying to increase Social Security spending the way health care providers lobby to increase Medicare spending. This largely explains why, on a per-capita basis, Social Security outlays grow at roughly the rate of the economy, while Medicare outlays grow about 2 percentage points faster."

"Vouchers are the most plausible way to restrain Medicare spending. They are also the most humane way, because they let enrollees retain the benefits that mean the most to them."