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A game changer on Medicare's future?

By William J. Bennett, CNN Contributor
December 22, 2011 -- Updated 1305 GMT (2105 HKT)
House Budget Committee Chairman Paul Ryan's proposal would reform Medicare from the bottom up, William Bennett says.
House Budget Committee Chairman Paul Ryan's proposal would reform Medicare from the bottom up, William Bennett says.
STORY HIGHLIGHTS
  • Rep. Paul Ryan and Sen. Ron Wyden have proposed a bipartisan health plan
  • Bill Bennett: Plan would allow choice between private health plans or Medicare
  • He says private companies and government would compete on quality and price
  • Bennett: Ryan-Wyden plan is better than Obama health plan and can get bipartisan support

Editor's note: William J. Bennett, a CNN contributor, is the author of the newly published "The Book of Man: Readings on the Path to Manhood." Bennett, the Washington fellow of the Claremont Institute, was U.S. secretary of education from 1985 to 1988 and was director of the Office of National Drug Control Policy under President George H.W. Bush.

(CNN) -- The Paul Ryan-Ron Wyden Medicare reform plan is a political game-changer. Amidst heated gridlock in Washington, Rep. Paul Ryan, a conservative budget hawk, and Sen. Ron Wyden, a respected liberal senator, have reached consensus on vital entitlement reform. Medicare is on the track to insolvency; this could be the bipartisan solution.

Starting in 2022, the Ryan-Wyden plan would change Medicare into a premium support system that allows seniors to choose between private insurance plans or the existing, traditional, government-run Medicare plan for the coverage and plan that is best for them. Americans currently over age 55 would not be affected by the changes.

The premium support system (which is different from a voucher system) would be safeguarded so all the new private health plans would be required to offer health services equivalent to the traditional Medicare system. The premium support payments would be risk-adjusted so seniors with greater health problems would have affordable coverage.

William Bennett
William Bennett

These new private plans would not be able to deny Americans coverage based on pre-existing conditions or health risks. Additionally, there would be a cap on cost growth of 1 percent over the growth rate of Gross Domestic Product, plus inflation; the cap would not trigger automatic cuts, but it would require Congress to enact cost saving legislation.

Some conservatives object to the fact that Ryan, R-Wisconsin, keeps traditional Medicare intact, while liberals oppose the intrusion of private plans. Both sides had to give something to reach compromise, but Ryan said he believes that over time, competitive, transparent private markets will outperform the government option.

The Ryan-Wyden reforms look radically different from President Obama's Medicare changes under Obamacare. His plan would cut $500 billion from Medicare over time to pay for other parts of Obamacare. A board of elected bureaucrats, called the Independent Payment Advisory Board, would regulate Medicare costs and legislate cost-cutting measures.

The Ryan-Wyden proposal would reform Medicare from the bottom up, giving Americans the power to choose the health care plan best for them. Private markets and the government would compete for business according to who can offer the best prices and plans. President Obama's plan reforms Medicare from the top down. Elected officials would determine the rates of growth and reimbursements and mandate those to hospitals and doctors.

This distinction is important both politically and philosophically.

Ryan's collaboration with Wyden, D-Oregon, undermines the president's political argument that Republicans want to dismantle Medicare. Furthermore, the collaboration of a conservative and liberal nullifies the president's campaign mantra that reform is impossible with a "do-nothing" Republican Congress. The president's "Mediscare" tactics no longer hold water.

Putting politics aside, Republicans and Democrats can reach consensus. Bipartisan work is possible without sacrificing core principles, and if we are ever to reform entitlements and cut the deficit, bipartisanship is essential. Wyden is a serious Democrat who recognizes that his party and the president would do well to follow suit.

Most important, the Ryan and Wyden compromise shifts the focus of entitlement reform toward free market, private business solutions and away from big government, one-size-fits-all fixes.

Given the status quo in Washington, the odds that this proposal would be enacted before 2012 are slim. The president already disregarded his own deficit commission, in which several commissioners advocated similar Medicare reforms.

With the Ryan-Wyden compromise on the table, however, the outcome of the 2012 elections become even more important. With a new president, in one fell swoop Congress could roll back Obamacare's cuts to Medicare, put it on a track to fiscal solvency, and politically disarm "Mediscare" attacks -- all with bipartisan support.

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The opinions expressed in this commentary are solely those of William J. Bennett.

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