On Friday, First District Congressman Paul Ryan participated in a panel discussion on the future of U.S. healthcare as part of the Milwaukee Press Club's Behind the Headline series. Excerpts of Ryan's prepared remarks follow:
Let me just start with the title here: "Is Rationing in Healthcare Inevitable?" No, it's not, but let's take a journey down the present path we are on and the course in front of us.
Earlier this week, I had a hearing with the Chief Actuary of Medicare and Medicaid Services, Rick Foster - a profound, consummate professional. He's been the actuary for a couple of decades and is a very smart guy. I'll just go through his scenario of where we are headed in the future with respect to healthcare and, in particular, Medicare and Medicaid.
Right now, Medicare reimburses providers, on average, 80 cents on the dollar for healthcare. This number can move around based on the product you're talking about and what service is being provided, but the point is the larger trend. By the end of the decade, Foster says that Medicare will be reimbursing providers at about Medicaid rates and both will go down even further over the course of the next few decades.
Now, what the actuary rightfully says is: "Who is going to keep doing this? What providers are going to be able to continue the kind of cross-subsidization that they're doing now when they are already losing so much money on these programs?"
So what the actuary is showing is that we're going to have a massive provider shortfall because these programs will be un-implementable. The cross-subsidizing that goes to the private sector, we believe, will drive the private sector out of business and force more people into the healthcare exchanges. The healthcare exchanges, if you talk to private-sector actuaries who are preparing for the new healthcare law, are preparing models that are basically Medicaid for everybody. What we see coming into convergence in the next few years, if the President's healthcare law continues on, is more of a Medicaid-for-all situation.
Going back to what the actuary from Medicare and Medicaid Services was telling us - by 2019, we're going to be adding 20 million more people to Medicaid. Medicaid is a very important program, but Medicaid is a program that is not working the way it should. Medicaid is a program that is reimbursing providers at very low rates, to the point where lots of doctors don't take Medicaid patients. If a person comes in, in many parts of this country, with Medicaid, it's considered to be a sub-standard system healthcare and that is not the route we want to go.
The actuaries are also telling us that the Part A Trust Fund for Medicare goes bankrupt in 2024. The new healthcare law also takes about $500 billion from Medicare to spend on the President's new healthcare law.
So we have before us a situation that in the future will look like this, according to the experts:
We will have a system that is driving down reimbursements to providers making them raise prices to private payers, businesses, and insurers which in turn will make it more likely that they drop health insurance for their employees and push everybody into these healthcare exchanges, that are designed to create a Medicaid-for-all type system, and that system is eventually going to go bankrupt.
Taking a look at the tools that are being used at this moment to deal with all of this -- rationing is inevitable in this situation.
This week, I had the chance to question Kathleen Sebelius at a House Ways and Means Committee hearing and we talked about the fact that they're beginning to screen candidates for the Independent Payment Advisory Board. They're now beginning to assemble these 15 people, 15 Presidential political appointees, who will be appointed to serve on the Independent Payment Advisory Board, that starting in 2014 must start implementing reforms and if Medicare exceeds its growth targets - which were lowered in the President's budget -- then this board will decide how to impose price controls on the provider community in order to meet these targets.
Here's the deal: this board, of 15 unelected, unaccountable bureaucrats is designed to circumvent Congress. If Congress doesn't like their decisions, then Congress must replace them with other cuts in the Medicare program. We can't turn it off without a supermajority vote, and if Congress decides not to do anything about it, then the board proceeds.
The reason the law is set this up this way is so that Congress actually doesn't deal with this issue. It lets the IPAB go into law and so this board will be putting together price controls which clearly lead to denied care for seniors--current seniors, mind you. We see this law as an inevitable road to rationing by government by unelected bureaucrats. I don't know how else you can make any of this work if you don't do this the way that the law designs it.
This is not who we are. This doesn't work. It's bad policy. It's not going to succeed.
People ask me all the time: "Gosh, are you going to get rid of ObamaCare?" I can't get down an aisle in a grocery store in Janesville without somebody saying, "What are you going to do about ObamaCare?"
This law will not stand. The reason I say this is it's not whether the elections go the right way or the wrong way from anyone's perspective. It's that the law literally can't stand. The law will not be able to support itself. I do believe that it will collapse our system under its own weight.
The question is, "Are we going to prevent that from happening? Are we going to have a better, replacement system than the path we're on?"
The last things we want to have happen is have our healthcare system collapse; is to have our budget deficit go through the roof; is to have seniors have care denied to them from unelected boards of bureaucrats; is to have all that great innovation and these wonderful things we've done in Wisconsin to have young people coming out of school trained to be bright doctors stopped from happening.
The point I am trying to make is that there is a better way. There is a light at the end of the tunnel. Patient-centered, consumer-directed healthcare works.
Bringing those core principles of market economics into this sector of our economy where it hasn't been fully developed works. We can have a system in this country where everyone has health insurance, regardless of their income, regardless of their health status. That's achievable.
We spend more money on healthcare than any other country does on a per-person basis, by a factor of 2.5 times. We spend plenty of money on healthcare. It is how we spend it and what kind of a system we are spending it in that matters.
The point is, when we look around us -- and that's just the wisdom of Wisconsinites to do -- and we see that we have systems which show you how to stretch that healthcare dollar further. We've got to inject the patient as the nucleus of our healthcare system so that the providers, the doctors, the hospitals, the insurers are competing against each other on an honest, fair, transparent basis for our business as patients. That act of choice and competition, whenever tried in any other aspect of this economy, helps address the root causes of inflation. It helps drive up quality and drive down price.
The goal of reform ought to be to get those incentives in the right place, just like in manufacturing. Drive around Wisconsin, go to the industrial park at the edge of every city limit, and you will find a manufacturer that is lean, that is efficient, that is productive in the face of severe international competition, because the incentives are right.
Going back to the testimony from the actuary of Medicare and Medicaid - what we need to do is have the kinds of reforms that put the right incentives in place so that the healthcare system, the healthcare economy, the healthcare producers, the healthcare innovators, the healthcare device manufacturers, are all focusing on outcomes and costs and benefits. And you don't get that by relying on the wisdom of 15 people in some government bureaucracy who are trying to manage an entire system across our economy--about 17% of our economy.
You get that by unleashing creativity, by rewarding outcomes, by having transparency, and by using the money the government, businesses, and individuals spend on healthcare -- and yes it is a lot -- and spending it in a smarter way.
Let's make sure that people who have lower incomes get more of the money than everybody else so that they can have affordable health insurance. Let's make sure that people who have preexisting conditions -- you know, who get cancer through no fault of their own -- have a system that makes sure they are not going to go bankrupt if they get sick. There are ways of accomplishing this without having the government take over this entire sector of our economy.
I really believe that there are seeds of a bipartisan approach. I tried to demonstrate this with my work with Alice Rivlin, President Clinton's budget director. I've recently demonstrated this late last year with Ron Wyden, a progressive Democratic Senator from Oregon, who serves on the key committees in the Senate, to show how we would reform Medicare. Premium support is what we called these reforms.
We believe that there's an emerging bipartisan consensus on how best to fix this real problem. I'll simply conclude with this: it's not about repealing the President's healthcare law; it is about repealing and replacing the President's healthcare law.
It's not enough for policy leaders to say, "Get rid of this law, it's terrible, repeal it." I clearly believe that, because I think it is a fundamentally flawed policy architecture that cannot stand, but we have an equal responsibility to articulate what we would replace it with. If we replace it the right way, using the right principles, and using the know-how we have and building on what we already know works, we can solve this problem.
For those of you in the business community who are here thinking about healthcare, looking at the economy in the future, looking at your bottom line, looking at your community, looking at whether or not the coming debt crisis is one where you can survive with your business or whether your kids will grow up in a land with growing prosperity and higher living standards, this is a healthcare issue. The healthcare issue is our debt issue. The debt issue is our economic issue.
Make no bones about this final point: if you don't deal with the healthcare issue -- healthcare inflation, un-insurance, the new law coming into place, the bankruptcy of Medicare and Medicaid - then you do not deal with our national debt issue, because the drivers of our debt are our healthcare programs.
The point I am trying to make is that if we don't get this issue right, then it's going to be bad for our economy, it's going to be bad for our future, it's going to be bad for our economic vitality, it's going to be bad for American competitiveness, and we will have that debt crisis we're trying to avoid. If you get healthcare right, so many other problems that we have in this country and our economy and our fiscal situation improve themselves. That's foremost what's most important.
As far as I'm concerned, as a political person, meaning someone whose name is on the ballot, I really believe we owe the country a choice.
This fall, if we do anything right, we owe you, our fellow citizens, an alternative path to fixing this problem so that we can give the country a path of prosperity, of a debt-free nation, of higher living standards, of economic competitiveness, of upward mobility, of economic opportunity, and of a system that does provide healthcare to people when they need it, whoever needs it.
With that, thank you very much, I appreciate it.