by Charles Lemos, Tue Apr 05, 2011 at 11:59:09 AM EDT
Alice Rivlin, the former OMB director under President Clinton and a former Federal Reserve Vice Chair, spoke with Bloomberg News and gave her reaction to Rep. Paul Ryan's proposal to essentially privatize Medicare for those under 55 years of age. Rivlin, who currently works for the DC think tank Brookings Institution and teaches at Georgetown University, worked with Ryan in developing his proposal.
Rivlin's original proposal is similar to the one which Rep. Ryan is unveiling today in that seniors would get lump-sum payments for the value of their Medicare benefits and use them to buy coverage in the private marketplace. The payments would climb slightly faster than inflation, but they would most assuredly lag rapidly rising health care costs whose costs have been outstripping inflation for decades. As a result, people now in their thirties would likely end up paying for a much bigger share of their health insurance when they retire than today’s seniors. On top of that, people now in their thirties would no longer even know how high their future out-of-pocket costs were likely to climb.
It's important to note that both plans would ultimately end Medicare as we know it. The reality is that Medicare is a single-payer system that, despite some looming financing problems, serves its intended purpose very well.