It Turns Out Ryan and Obama Agree on Putting Medicare in a Budget Both Budget Plans Would Limit Medicare Growth to GDP+0.5%

With Congressman Paul Ryan's (R-WI) new budget comes an interesting piece of good news: an apparent agreement between House Republicans and President Obama on the need to hold Medicare cost growth to GDP plus 0.5 percent per beneficiary in the long-term.

Within his FY 2013 budget, President Obama proposes to expand the powers of IPAB and lower the cost growth per beneficiary target for the board from GDP plus 1.0 percent to GDP plus 0.5 percent per beneficiary in order to ensure that long-term Medicare spending is controlled. At the same time, Ryan's budget aims to hold Medicare spending growth per beneficiary to the same number -- GDP plus 0.5 percent per beneficiary -- through a competitive bidding approach with Medicare competing alongside private insurance plans and through the limit on spending growth if needed.

Of course, we have already heard the mud-slinging about premium support shifting costs to beneficiaries and IPAB leading to the rationing of care by reducing access. The main concerns themselves about each approach may be legitimate, but lawmakers cannot pretend that their preferred option is painless while the other side's option would be excessively destructive. Sticking to these limits will be difficult no matter what approach we take, but it is a critical element of controlling rising debt given that health care costs will grow to extraordinarily high levels unless we act.

Both approaches hope to control the growth in spending on health care through more efficient delivery of care -- either through competition among plans to identify the most cost effective ways to deliver care or an expert panel empowered to implement delivery system reforms insulated from political pressures. But in the end, limiting the growth in government spending on health care will require people paying more or getting less.

The country needs an honest discussion that acknowledges the pros and cons of each approach and the tradeoffs that must be made. It would be much more constructive if both sides recognized that, in the end, beneficiaries, doctors, hospitals, drug companies, and other providers will likely all have to share in efforts to control health costs and control rising debt. This would lead to a much more productive debate than we're seeing today, which hopefully would lead to solutions lawmakers can agree on.

Even though the methods for achieving a target growth rate of GDP plus 0.5 percent in the President's budget and Ryan's budget are quite different, let us hope that this first step of indirectly agreeing on a target will lead to a bipartisan agreement on how to contain Medicare, and other health spending, cost growth. 

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