Romney’s Medicare reform is neither bold nor specific

Former Massachusetts Gov. Mitt Romney’s Medicare reform proposal has been widely praised in the conservative media and it has even won the approval of House Budget Committee Chairman Rep. Paul Ryan, R-Wis., the GOP’s leading policy wonk.

On Tuesday, a National Review editorial praised the plan as “bold and specific.” But in reality, the plan is another example of the Republican presidential frontrunner trying hard to have it both ways.

Because he’s trying to win a Republican primary, Romney wants to be able to claim he’s offering a plan that’s similar to Ryan’s ambitious budget. But with an eye on the general election, he wants to insulate himself from Democratic criticisms that he’ll end Medicare.

There’s a natural tension between these two goals, which Romney is dodging — for now — by leaving out crucial specifics.

Like Ryan’s plan, Romney’s approach would transition to a system in which seniors are given subsidies to choose among a variety of health care plans. But Romney would also offer seniors the choice to remain in traditional Medicare.

One of the biggest potential problems is that it would be hard to create a level playing field between traditional Medicare and private plans, for many of the same reasons conservatives vigorously opposed a “public option” in Obamacare. But in some ways, creating fair competition would be even more difficult under Romney’s proposal.

Romney has not specified at what point his reforms would kick in. But as an example, in 2024, according to projections from the Centers for Medicare and Medicaid Services, there will be 71.2 million seniors enrolled in traditional Medicare, giving it market power to set prices and shift costs onto private plans.

About 4 million Americans turning 65 that year would be theoretically eligible to choose private coverage. How do you create a competitive market when one participant starts off with at least 95 percent market share?

Romney’s plan also promises that the price for seniors to buy into traditional Medicare would reflect the program’s cost to government. But is it realistic to expect future Congresses to hike premiums for seniors if necessary to cover costs? And what would be included in the cost calculation?

Private health care plans have to pay for salaries, office space and other such administrative costs. Yet when it comes to Medicare, those costs are spread among the federal budget. Would they be included when setting premiums? If not, it’s another unfair advantage for traditional Medicare.

The biggest omission in the Romney plan is that it doesn’t set the value of the subsidies to seniors, nor their rate of growth. This is a key factor in determining whether the plan would put Medicare on a sustainable course.

If Romney sets subsidies low, Democrats will attack him, and if he sets them too high, his plan won’t save nearly as much money.

Also, any proposal inevitably gets significantly compromised through the legislative process. If Republicans were to start off with the Ryan proposal, and after a brutal fight, ended up with something closer to the Romney plan, conservatives may still be able to claim victory. But the Romney plan has already moved the goalposts decidedly to the left. What would remain once it gets heavily compromised?

Philip Klein is a senior editorial writer for The Washington Examiner.

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