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More Mediscare

Aug 20, 2012, Vol. 17, No. 45 • By JAMES C. CAPRETTA and YUVAL LEVIN
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The oddly convenient academic study has long been a weapon in the Democratic party’s arsenal of election-season demagoguery. Do you need to say that conservative policies would sink the republic? Here’s a paper by scholars from a respected university, published in a respected journal, and released just as your campaign was turning to the issue in question, which happens to say just what you had in mind. It might all fall apart on closer inspection, but in the heat of a campaign it’s a perfect fit.

Rep. Paul Ryan

Rep. Paul Ryan


It was therefore not entirely surprising to see a paper by three Harvard researchers appear in the Journal of the American Medical Association on August 1 that sought to project the effects of a premium-support reform of Medicare based on the performance of the Medicare Advantage program.

Premium support is the idea championed by House Budget Committee chairman Paul Ryan and (Democratic) Senator Ron Wyden, among others, and included in the 2013 budget proposal passed by the Republican majority in the House this year. It aims to inject market-driven cost discipline into Medicare by allowing the program’s beneficiaries to use their entitlement dollars to choose among competing insurance options (including private insurers and a federally run fee-for-service plan), rather than having the federal government centrally manage the entire system. It is the very antithesis of Obamacare’s government-centric approach to health care financing.

Almost every congressional Republican has now voted for the sort of premium-support reform proposed by Ryan and Wyden, and Mitt Romney has endorsed it too. Since scaring seniors about changes to Medicare has been a central pillar of Democratic campaigns for decades, there is little doubt that the Obama campaign and congressional Democrats will direct a great deal of critical attention to premium support this fall.

At first glance, the Harvard JAMA study (which was funded by taxpayer dollars through the National Institutes of Health) would seem to provide just the veneer of academic respectability and authority that Democratic operatives crave for their attacks. The bottom line, the authors assert, is that if premium support had been operative in Medicare in 2009, the average beneficiary would have had to pay $64 more per month to stay in the traditional, government-administered Medicare fee-for-service program. No one should be shocked to see Democratic ads in the coming weeks and months attacking Romney and -Republican House and Senate candidates for wanting to impose “nearly $800” more in annual premiums on seniors living on fixed incomes. The Center for American Progress (where one of the study’s authors, David Cutler, is a senior fellow) described the study in just those terms within hours of its publication. The 30-second spots with ominous background music can’t be far behind.

But this particular study turns out to be something new in the genre of convenient pseudo-scholarship: It doesn’t just distort the subject it takes up; it even distorts its own findings. When you examine the authors’ actual facts and figures, the study turns out to offer one of the strongest cases yet published in favor of premium support.

The Harvard researchers looked at the (limited and constricted) private-plan option already operating in Medicare today—a program called Medicare Advantage, created in 2003, which allows seniors to have their benefits provided through private insurers—and found that, on average, the Medicare Advantage plans cost far, far less than federally run fee-for-service Medicare.

This is the opposite of what Democrats were saying a year ago. Then, they were touting a Congressional Budget Office study that estimated the private plans offered to Medicare beneficiaries in the system Ryan envisions would cost much more than traditional fee-for-service Medicare, and thus require higher premiums—$6,400 higher in 2022—to be paid by beneficiaries. This new study shows otherwise, and proves the very point that champions of premium support have been making for years.

The $64-per-month estimate is based on the study’s finding that private plans can deliver the full Medicare package of benefits at a significantly lower cost—nearly -10 percent lower, on average—than the government-administered fee-for-service program. That’s precisely the win-win proposition Paul Ryan has been touting: Beneficiaries could get their comprehensive Medicare benefits for no additional premium if they selected the less expensive private plans, and taxpayers would spend 10 percent less on the subsidies for the Medicare program.

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