Alternative approaches to Medicare
Date posted: September 10, 2012
One of the emerging issues in the national political campaign is Medicare. Medicare provides financial help to the elderly for healthcare expenses. It’s a very large program that many argue is growing too fast to be sustainable. N.C. State University economist Mike Walden takes a look at some of the alternative ideas for addressing Medicare costs.
“And …, these alternative ideas have come to the forefront with the selection of Representative Ryan as a vice presidential candidate. And if you look at what Representative Ryan, who has been outspoken on Medicare and has a plan for Medicare, what he wants to do in terms of arresting the rate of growth of Medicare — and you look at, for example, what the president has proposed — actually both of them have the same goal of having Medicare grow at a slower rate. Technically, they want it to grow at about the rate of growth of the economy plus one-half percent. So their goal’s the same.
“How they get to that goal is very, very different. And I think this is where you do have a clash of ideas. Representative Ryan essentially wants the marketplace to try to arrest the growth of Medicare. And what he wants to do essentially is to provide a voucher to Medicare recipients that they would then use to help finance the purchase of private … insurance policies. And people would have to comply with those private insurance policies.
“Also, Representative Ryan thinks that the competition between alternative insurance companies in providing those policies would put a cap on the rate of growth of Medicare. The president and his supporters say, ‘Well, that may work in some kinds of markets, but the medical market is different. It really … doesn’t really follow typical competitive forces.’ Therefore that approach, they would argue, would not work, and we need more regulations, we need more control from government policy makers in terms of seeking out wastes in medical systems, providing some incentives for individual doctors and hospitals to control the rate of growth of healthcare costs.
“So, you really do have a very, very stark clash of ideas here, and I think this is healthy, obviously, to have this discussed as the political campaign unfolds.”
Category: Economic Perspective