The mastermind of Paul Ryan's Medicare reform plan, Henry Aaron, has changed his mind, based on -- gasp! -- evidence that his theories didn't pan out: "The evidence to date is not encouraging," Aaron testified, noting a recent study that isolated the effects of competition on Medicare Advantage costs from government-related influences. "After controlling for all those factors, Medicare Advantage plans are more expensive than is traditional Medicare."
Premium support is key to Ryan's plan. Ryan has assumed that if free markets are left to work by themselves (health insurance exchanges) then prices will eventually come down; and the gov't. should provide a small subsidy to pay for premiums in the meantime.
But Aaron went on to say, with Rep. Ryan in the audience, that premium support as envisioned in Obamacare should be left to work, to see if his ideas have any merit:
The passage of the Affordable Care Act means we have put in place a key element of the premium support idea for the rest of the population, namely health insurance exchanges. The Medicare population is vastly more difficult to deal with than the population under the Affordable Care Act. We should prove that the health insurance exchanges work, get them up and running before we take seriously, in my view, calls to put the Medicare population through a similar system.
Aaron also noted that the current "pro-business" Republican Congress won't enact the strict regulation needed to prevent insurance companies gaming the system: "The regulatory climate has changed. It is far more hostile to the kinds of regulatory intervention that...I thought were essential."
By Michael McAuliff
May 3, 2012 | Huffington Post