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Romney on Medicare Reform

10:36 AM, Nov 4, 2011 • By JOHN MCCORMACK
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In a USA Today op-ed on how he'd cut spending, Mitt Romney sketches out a plan to reform Medicare: 

These three approaches, applied systematically throughout government, will produce a fiscal turnaround. But that achievement will be short-lived if we do not also ensure that both Medicare and Social Security are made sustainable for future generations. Reforms should not affect current seniors or those near retirement, and tax hikes should be off the table. However, the retirement age for younger workers should be increased slowly to keep up with increases in longevity. And Social Security benefits for higher income recipients should grow at a slower rate than for those with lower incomes.

Tomorrow's Medicare should give beneficiaries a generous defined contribution and allow them to choose between private plans and traditional Medicare. And lower-income future retirees should receive the most assistance. I believe that competition will improve Medicare and the coverage that seniors receive.

Joseph Lawler notes this plan, which gives beneficiaries the choice to remain in the traditional government-run Medicare system, seems similar to the one put forward by former Clinton budget director Alice Rivlin and former New Mexico Senator Pete Domenici. Lawler argues that the Ryan plan might be better, but Ryan said in April that he's not opposed to this option:

Newt Gingrich suggested that future seniors (those now younger than 55 scheduled to get a Medicare subsidy when they turn 65 under Ryan's plan) should have the option to stay in the current Medicare system. What's wrong with that?  

"I don’t have a problem with that," Ryan replies. "I think it’s a fine idea worth considering. [Bill Clinton's budget director] Alice Rivlin and I have talked about that in the past."

But could his budget achieve the same amount of savings if future seniors had that choice?

Ryan says it's possible "because it wouldn’t be an open-ended fee for service system, like the current one for the under-55 plan. They would get a set amount of money to go toward the traditional fee for service and then, like current Medicare they’d probably buy coverage to supplement it. I would think a person would prefer a comprehensive plan like Medicare Advantage is today, but you can do this in a way that doesn’t have a budgetary effect, that it doesn’t bankrupt the program."

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