• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Rep. Paul Ryan (R-WI) Outlines a New Paradigm for Health Care Reform

    Yesterday, Representative Paul Ryan (R–WI) shared his outlook for repealing and replacing Obamacare.

    Ryan pointed out that rising health care costs not only make insurance unaffordable for many Americans; they are also a main driver of growing federal deficits. As medical inflation pushes the cost of insurance and medical goods and services sky high, the cost to taxpayers of Medicare, Medicaid, and the new open-ended entitlements created in Obamacare goes up as well.

    Adequately addressing rising costs will require pinpointing the root causes of medical inflation. Ryan defined these as over-utilization, under-payments, and inefficiency stemming from the detachment of consumers from the costs of their health decisions in a third-party system. The irony, as Ryan put it, is that “the system that shields us from the cost of services has actually left us paying more.”

    Rather than restoring much-needed market forces to the health care system, Obamacare doubles down on government price controls and open-ended entitlement spending. However, the left’s health care agenda is not inevitable. Ryan outlined an alternative plan that would allow for a fundamental shift in the incentives facing all key players in the health care system. As he put it, “Our plan is to empower patients; their plan is to empower bureaucrats.”

    Ryan’s proposals would restore the patient as “the nucleus of the health economy,” since patients would no longer play a passive role in the decisions that determine their health benefits or the care they receive. The three main changes suggested by Ryan bear many similarities to reforms included in Heritage’s own Saving the American Dream proposal:

    • Moving Medicare to a premium-support system. By transforming the way seniors receive their health benefits from the government, they would be able to “enroll in the health plans of their choice and receive a defined contribution (known as premium support) toward the cost of their plan…. The premium support will be sufficient for seniors to afford an adequate level of benefits, regardless of age or health care condition.”
    • Moving Medicaid to a block grant system. “In exchange for the capped federal allotment, states are granted considerable new flexibility to manage and administer the restructured Medicaid program to meet its mutual federal and state objectives. This means that states are granted broad discretion and authority to meet general objectives and outcome measures. States that wish to try very different approaches to better serve and improve health care quality for these key populations would have additional authority beyond the normal waiver process.”
    • Tax reform to replace the flawed tax treatment of insurance. “The current individual tax exclusion for employer-sponsored health insurance and other tax mechanisms are replaced with a non-refundable fixed tax credit for households to purchase health coverage…. This change is needed because under today’s system, the tax code provides unlimited tax breaks only to those workers who receive coverage through their employers. Workers cannot use this tax break if no plan is offered through their employers or if they simply prefer a plan other than their employer’s…. The exclusion provides little or no help to lower income workers who are struggling to afford coverage for their families.”

    Structural flaws are to blame for making coverage unaffordable and inaccessible for millions of Americans. At the same time, no incentives exist to deliver the best quality of care available at the lowest price possible. The reforms Ryan outlines would start to reverse these fundamental shortcomings and put patients in charge of their care. His plan would offer, as Ryan put it, “real security instead of empty promises.

    Posted in Obamacare [slideshow_deploy]

    11 Responses to Rep. Paul Ryan (R-WI) Outlines a New Paradigm for Health Care Reform

    1. Jay Dee says:

      “The current individual tax exclusion for employer-sponsored health insurance and other tax mechanisms are replaced with a non-refundable fixed tax credit for households to purchase health coverage…. "

      Yippee! Socialism for EVERYONE!

    2. jill46 says:

      Who decides what an "adequate" level of heathcare is? We have seen exactly what has happened to pensions since the switch to defined contribution rather than defined benefits.

    3. Guest says:

      If Paul Ryan thinks putting everyone into the private, individual health plan market is going to work for low or moderate income workers, he is clueless about the cost of those plans. Even if the employer passes along the savings from shutting down the company group plan as additional compensation, the cost for your average 40-yr old for a plan similar to a typical group plan would not be affordable with their after-tax dollars. Someone under 30 who has never been to the doctor would have a shot at it.

    4. John T. O'Malley says:

      Are you kidding! Same old stuff from Ryan wrapped in a different wrapper. I hope the American people wake up to what the Right-Wing Libertarian-Tea-Party Minority is trying to do to this country and send them all packing next November. This is not my idea of "Compassionate" Republican Conservatism. What happened to Moderate Republicans. Are they hiding?

      • Bobbie says:

        hey, what do you mean by "trying to do to this country?" those you oppose are trying to protect what America stood for! Freedom! Freedom doesn't exist where government DOES, outside their constitutional duty already proven failures to their core purpose. Why do you accept so little and have inept expectations of matters conducted outside your control effecting your life? Why do you trust government over your freedom? Why do you trust government over your fellow American? ick!! there's something wrong with yours and the like minded mindset. government controlled societal indoctrination and YOU FELL FOR IT! cheating your minds own ability!!!

        It's too bad such a minority of Americans have this unfortunate, personally damaging attitude tearing down every aspect of freedom this country stood for cheating yourselves along with the whole country, with the SOLE backing of America's fundamentally transformed government of corruption. Nothing but WEAK!

    5. glenna cook says:

      Food, shelter, healthcare, and education are human necessities that need to be available to all humans, regardless of their government or economy. These necessities are the foundation for any successful society – something Americans used to be able to count on as the understood basics for "life, liberty and the pursuit of happiness." In our Democracy as our form of governance, people come first — with our Free Market economy coming AFTER the necessities of life for our citizens. Enough of trying to make our capitalist economic system more important than our democratic form of governance. Obviously, Wall Street and Big Business have proven they shouldn't be governing anything…..

      • Bobbie says:

        glenna, you do realize wall street and "big business" of government's choice, have been bailed out by the government beyond our control, right? You do realize had the government not interfered with the problems of the private business of wall street and "big business" of government's choice, they would've been accountable to their own consequences. The government backs what you guilt! How do you trust that? If you knew how the free market works, you'd see endless government overreach that is destroying EVERYBODY'S freedom! Capitalist economy system is the only system that keeps us free from government dependency! We don't need government's control to help each other.

        The American government should not be demoted to provide charity when we have always done it all by ourselves!

      • kaye says:

        we are a democratic republic, public school graduate.

    6. Paul Lohr says:

      The root causes of high medical costs are almost never discussed. The American Medical Association is essentially a sophisticated labor union and lobbying organization. The AMA's founding document, the Flexner Report, plainly stated that the price factor of medical care had to be removed. And they have made that happen. Combine the AMA with the government forcing hospitals to treat people who cannot pay. Then add to that civil trials that are almost zero risk for plaintiffs and juries who reward frivolous claims. Also add in there a huge competitor for medical services – the federal government through medicare, medicaid, and obamacare. Add in there a third party payer system – insurance – now medical services can be charged to two entities instead of one. Also, don't forget the United States has a government-run education system that controls the number of practicing doctors.
      Each component I've mentioned has played a role in removing the natural controls of the free market. Is it any wonder prices are high and on the increase?

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.