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The GOP's Medicare Advantage

August 15, 2012

Predictably, Democrats went after Mitt Romney's new running mate immediately, describing Paul Ryan as a "certifiable right-wing ideologue" whose views are "extreme" and "radical." They focused on Medicare, warning that Republicans "would end Medicare as we know it," making it "a voucher system" that costs seniors "thousands of dollars in health care costs."

Some Republican hand-wringers moaned. They failed to consider that Democrats were going to level these charges no matter whom Mr. Romney picked as his running mate. And they ignored the ammunition the party has to turn the issue against Democrats.

For one thing, the GOP doesn't cut Medicare spending. This fiscal year, Medicare outlays will total $503 billion. Even under the House GOP budget—considered the most parsimonious plan out there—Medicare spending would be $855 billion annually 10 years from now. That just 3% less than what President Obama proposes, hardly enough to justify Vice President Joe Biden's claim that Republicans are "gutting Medicare."

Mr. Romney also has advantages in the contest with Mr. Obama. The president's legislation cuts Medicare by $716 billion to pay for ObamaCare. But because so many baby boomers are turning 65, Medicare is going broke. (Thanks in part to ObamaCare cuts, Medicare's hospital trust fund will be insolvent by 2024, according to the Social Security and Medicare Boards of Trustees.)

Rather than steal from the health-care program for seniors to finance expanding health care for younger Americans, Mr. Romney would repeal ObamaCare and return that $716 billion to Medicare to shore up its ragged finances.

More important, Messrs. Obama and Romney differ on how to moderate the growth of future heath spending. Mr. Obama relies on a board of unelected bureaucrats—whose decisions cannot be appealed—to decide which procedures will be covered and at what prices. This will lead to rationing and slow down innovation in new therapies, procedures and devices.

Mr. Ryan's plan has a different approach. While there would be no changes in Medicare for those 55 or older, starting in 10 years younger Americans would have a choice. They could either pick traditional Medicare or use the average amount of money the government spends on each Medicare enrollee to buy private insurance. The reasoning is based on a reliable truth: Competition will lower costs by using market forces to spur innovation and improvement.

This approach is nothing new or radical. Called "premium support," it was recommended in 1999 by Louisiana Democratic Sen. John Breaux, chairman of President Bill Clinton's Medicare Reform Commission.

There's evidence of how effective—and popular—this approach would be. In 2003, Congress structured Medicare's prescription drug benefit by using the "premium support" concept. Though more seniors signed up and used it more than expected, the Congressional Budget Office now says the 10-year cost of this popular drug benefit will be 43% less than it estimated in March 2004.

Premium support can also make good politics. This spring, Resurgent Republic (a conservative polling group I helped organize in 2009) offered 1,000 registered voters the choice between a candidate who echoed Team Obama's recent Medicare arguments and a candidate who backed allowing those aged 55 and younger to choose between traditional Medicare and private insurance backed up by premium support. The poll's respondents picked the candidate favoring choice and premium support by 48% to 40% with independents preferring him 48% to 41%.

Republicans must make these persuasive arguments for Medicare reform, which brings us back to Mr. Ryan. He has been doing so successfully back home, winning re-election with between 63% and 68% in a congressional district carried by Bill Clinton (twice), Al Gore and Barack Obama.

Some Republicans worry that fighting about Medicare takes valuable time from talking about jobs, growth and deficits. True, but this fight was coming anyway. Better to debate it now in ways the Romney campaign can control rather than see it raised in the campaign's final moments through under-the-radar robo calls and mailers to seniors by Democrats.

It is said that in politics, if you're explaining, you're losing. That's not always true. Sometimes when you're explaining, you're reassuring voters and undermining your opponent's credibility.

That's the case with this issue now. It's why Team Romney was smart to quickly run an ad attacking Mr. Obama for robbing Medicare to pay for ObamaCare.

Democrats have long had an issue advantage on Medicare. Republicans cowered in fear. This time it's different. The Romney-Ryan ticket is not only talking about Medicare, it is putting Mr. Obama on the defensive. If Republicans succeed, politics will never be the same.

This article originally appeared on WSJ.com on Wednesday, August 15, 2012.

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