James Kwak explains why the Medicare plan Charlie Dent supports merely shifts costs from the government’s balance sheet to individuals without doing anything to control the actual rise in prices:
Here’s how to read that chart. In 2030, under current law, a 65-year-old Medicare beneficiary’s health care will cost $60. (Obviously, this is using an index, not real dollars.) Medicare will pay $35 and the beneficiary will pay $25 in Part B premiums and cost sharing. Under the CBO’s more likely “alternative fiscal scenario,” her health care will cost $71, of which Medicare will pay $41. Under the Ryan plan, the same health care purchased in the private market will cost $100; “Medicare” will give her a $32 voucher, and she’ll pay the last $68 on her own.
The bottom line is that the Ryan Plan increases beneficiary costs more than it reduces government costs. In a weird sense, it’s a bizarrely pro-government plan: it helps the government’s bottom line at the expense of ordinary people.