Path to prosperity prevails

Mitt Romney’s Vice Presidential pick, Paul Ryan, was crucial in drafting the Republican Party’s budget proposal for 2012.
Paul Ryan is so important that the Path to Prosperity is also referred to as the Ryan plan.
The plan passed the U.S. House of Representatives due to almost full Republican support even though no Democrats voted for it.
The plan failed in the Senate because the Senate is under Democratic control. The plan was designed to change Medicare, Medicaid and repeal ObamaCare among other things. The changes to Medicare are all about privatization. This is a very important detail because it highlights what Republicans believe.
They believe that in many but not all industries, a private system would always yield better results than a government controlled system.
Better results would come in the form of lower prices and higher quality. The first proposed change to medicare would be to raise the age of eligibility in 2022 by two months per year until the age eligibility hit 67 in 2033.
After 2022 the program would also be replaced with a voucher system for buying private health insurance. The government would also create a Medicare exchange program which basically shows you which insurers are competing for vouchers.
There are more changes to the system but the voucher and exchange system is the most relevant.
Young people like you and I probably are not going to spend much time thinking about this Medicare, but what is important is the underlying principle behind the change.
On the surface it seems that this plan expands your options. Insurers would compete for your vouchers by offering better deals than their competition until they get to the point of offering the best deal they can possibly get away with.
I would really like to see this plan put into motion just to see if it works. Opponents of the plan say that in reality, the plan would actually raise costs by as much as $6,000.
The value of the voucher would be equivilant to the cost of the second cheapest plan available on the exchange. When comparing the costs of Medicare’s current form to the hypothetical cost if Ryan’s plan had been implemented, shows the cost is initially higher.
But it is an experiment worth pursuing because in any new market the first generation is always more expensive and more clunky. It is only over time that new ways to improve quality and lower costs are found.
The difference though, between a government-run program and a mostly privately run program is this: in an atmosphere where a company’s survival is based on its ability to adapt quickly to profit a private run business, changes and improvements will occur much more quickly than in a government-run system which could easily rely on accumulating debt and raising taxes to finance itself.


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