Inventor of Paul Ryan Medicare Overhaul Says Plan Will Not Work

Paul Ryan's budget plan passed by a highly partisan House vote last month calls for sweeping changes to the Medicare program, reaching so far some analysts say to effectively destroy the program altogether. However, now the inventor of the plan adopted by Ryan's budget says the idea will not work.

Henry Aaron (not to be confused with the baseball great) came up with an idea in 1995, after Hilary Clinton's first attempt to overhaul the health care industry. It was called "premium support." It was simple: let consumers pick their health insurers in the private market, subsidize the premiums, and competition will drive down costs in the free market. It's the same theory in Ryan's plan. But Aaron, now with the Brookings Institute, no longer thinks the plan will work. In his testimony to Congress last week, Aaron says, "The conditions that recommended premium support in the mid-1990s no longer apply."

The relevancy here is important because Mitt Romney has campaigned to overturn the Affordable Care Act on Day-1 in office, yet he hasn't proffered an alternative to covering the tens of millions of Americans who are already uninsured or will be if the law is overturned. (Still waiting for the Supreme Court's ruling on this, so Romney might get off the hook.) Instead of having a new plan to cover the uninsured, Romney has endorsed Paul Ryan's budget (a potential VP pick), which looks to change Medicare substantially and pragmatically. But as Mr. Aaron's testimony points out repeatedly, the ACA will strengthen the Medicare system already in place and addresses its' so-called "insolvency."

"The [Medicare] Part A trust fund is currently in better shape financially than it has been for most of its history. If all provisions of the Affordable Care Act are enforced, its financial gap is small.

"Many are concerned over Medicare's long-term affordability. If provisions of the [ACA] are enforced, the added budget costs of Medicare over the next quarter century are modest and affordable...

"The conditions that recommended premium support in the mid-1990s no longer apply. The current Medicare program already fosters competition between publicly-administered, traditional Medicare and private plans. Current privately-administered plans raise costs."

Paul Ryan did not respond during the hearing, allowing Aaron's fellow Brookings Institute colleague, Alice Rivlin to defend the "premium support" measure.