2011-06-14

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Representative Paul Ryan of Wisconsin is the Chairman of the House Budget Committee.

In April the House passed a Republican budget proposal containing a fundamental restructuring of Medicare.

Many Democrats, including President Obama, blasted it as an attempt to leave seniors holding the bag on health care costs.

The charge is a lie.

Such demagoguery sacrifices the long-term fiscal health of the country for short-term political gain.

Ryan's proposal makes no changes to Medicare for those 55 and older.1 

Medicare needs to be changed since it is the most significant contributor to the fiscal gap.

We often hear about the deficit and the national debt, but what is a fiscal gap?

The "deficit" is the difference beween revenues and expenditures for the fiscal year.

The "national debt" is the sum total of those yearly deficits since the nation's founding.

The "fiscal gap" is a measure of the difference between government spending and revenues over the long term future.2 

The "fiscal gap" is a measure of the government's unfunded liabilities.

It is typically reported as a percentage of Gross Domestic Product.

USA TODAY has reported this fiscal gap to be about $62 Trillion as of fiscal year 2010.3

In the packet on page ___ is a summary of their analysis.

These trillions in unfunded obligations amount to $527,000 per household.

  • The U.S. National Debt Clock website reports an unfunded liability of at least $114 Trillion.4
  • Laurence Kotlikoff, a professor of economics at Boston University, estimates it at $202 Trillion.5

This corresponds to a U.S. fiscal gap of 14% GDP -- a figure also quoted by Rep. Michelle Bachman6 and the IMF7[International Monetary Fund].

Long-term fiscal solvency requires a permanent increase in revenues or spending reductions totaling 14% GDP.

Without spending reductions, tax revenues would need to be doubled from their present 15% GDP.

Fixing the federal budget is impossible without slowing the increase in health-care costs.

The health insurance program for seniors is the nation's greatest financial challenge.

The data shows, and most everyone agrees, Medicare is the most important driver of the fiscal gap.

At the heart of the problem is its fee-for-service insurance structure.

Paul Ryan’s Medicare Fix improves health care and shores up the federal budget with one entitlement reform.8 

Liberals have been howling about the supposed cuts that would happen under the Ryan plan
- That it will "End Medicare As We Know It."

But they never mention it will not affect those now over 55 years of age.

The fact is Obamacare already ends the program as we know it.9 

  • Obamacare replaces Medicare’s traditional fee-for-service financing.
  • It places a hard cap on future Medicare spending .
  • It puts a panel of 15 unelected bureaucrats in charge of slashing payment rates to providers.
  • This group of 15 technocrats will regulate patient care by interposing itself between the patients and their doctors.

The chief actuary for Medicare has warned that Obamacare’s cuts will drive providers away from the program. Payments will be too low to cover their costs.

The Ryan alternative starts from an entirely different premise.

Its solution is not top-down cost-cutting.

It seeks to achieve a more productive and efficient health sector with a robust, well-functioning marketplace.

The beneficiaries, not the government, will direct the entitlement.

The entire health-care system will reorient itself to deliver what they want and need at an affordable price.

This is the centerpiece of the Ryan Medicare reform.

Ryan's proposal does not end Medicare.

Assuming Obamacare is repealed or vacated, the present fee-for-service financing for those over 55 would not be changed.

For those under 55 their future Medicare would meet the same standard of benefits received by Members of Congress and other federal employees.

Plans would have to issue insurance to all people eligible for Medicare who applied.

These plans would charge the same premiums for all enrollees of the same age.1 

The Ryan proposal for medicare is a good-faith effort to address its long-term insolvency.

In May the Medicare trustees reported the main trust fund will be depleted by 2024. 10

The question is not whether, but how Medicare should be reformed.

Obamacare changes Medicare to fold it eventually into a socialist, top-down, single-payer government health-care bureaucracy.

Ryan institutes market-based efficiencies into the system.

Premium support is provided for those without adequate means to participate in the market.

In conclusion,

Let me suggest Ryan's Medicare Fix is a blueprint for a market-based overhaul of the nation's healthcare system.

I would hope this overhaul primarily would be legislated and instituted by the respective States, rather than at the Federal level.

Ryancare does what Obamacare does not.

It honors our individual liberty to make our own decisions.

Thank you

-- Peter Cooper


  1. The Path to Prosperity PRESERVES the Medicare Guarantee
  2. What is a Fiscal Gap? - Wikipedia
  3. U.S. funding for future promises lags by trillions
  4. U.S. National Debt Clock
  5. U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff
  6. Fixing our enormous fiscal gap (Rep. Michele Bachmann)
  7. IMF Study: Who Will Pay and How?
  8. Paul Ryan’s Medicare Fix
  9. Bye-Bye, Medicare! (As You Know It)
  10. Medicare funds will be depleted in 13 years, report says