U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. House of Representatives

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The Facts on Medicare and How to save It
New House Budget Committee video on Medicare offers clear facts to counter false attacks and advance bold solutions

May 25, 2011

The House Budget Committee released a video today explaining the real danger our growing debt poses to Medicare, and advancing a plan of action to save this critical health-security program.

Chairman Paul Ryan, who appears in the video, issued the following statement on the need for clear facts to counter the false attacks made by those unwilling to work with House Republicans to save Medicare.

“We can no longer let politicians in Washington deny the danger to Medicare – the danger is all too real, and the health of our nation’s seniors is far too important. We have to save Medicare to avoid disruptions in benefits for current seniors, and to strengthen the program for future generations. House Republicans have put forward a plan to do just that. Democratic leaders in Congress have failed to produce a plan – it has been 755 days since Senate Democrats even passed a budget. Meanwhile, the President’s plan would empower a panel of 15 unelected bureaucrats to cut Medicare for current seniors, while failing to save the program for future retirees.

“This video lays out the clear choice our nation faces on Medicare: Will Medicare become a program in which a board of bureaucrats manages its bankruptcy by denying care to seniors? Or will leaders work together to save and strengthen Medicare by empowering seniors to choose health care plans that work best for them, with less support for the wealthy and more help for the poor and the sick?  House Republicans have advanced solutions to save Medicare. Instead of working with us, the leaders of the Democratic Party have opted to play politics with the health security of America’s seniors.”

To learn more about the House-passed Fiscal Year 2012 Budget – The Path to Prosperity: http://budget.house.gov/fy2012budget/

To learn more about the facts on the House Republicans’ plan to save and strengthen Medicare: http://budget.house.gov/SettingtheRecordStraight/


Script of House Budget Committee Video:
“The Path to Prosperity (Episode 2): Saving Medicare, Visualized”

Washington has not been honest with you about Medicare. Medicare is a critical program which helps seniors achieve health security. But the truth is it’s headed for a painful collapse.

We can save Medicare, but we have to reform it so that it delivers the high quality we expect, at a price we can afford.

Let’s take a look at: what’s going on now; why it’s happening; and how we can save and strengthen this program. 

The average American household spends nearly 50 times more on health care today than it spent in 1960.  This translates into health care costs of more than $25,000 per US family, every year.

As a result, health care spending has gone from consuming just five percent of our economy to nearly one-fifth of our entire economy today.

While a lot needs fixing in health care, independent experts agree Medicare is a top driver of these unsustainable costs.  If we do nothing, Medicare spending will nearly double over the next decade, exhausting its remaining funds.

Here’s why: More than 75 percent of Medicare recipients, which is 35 million people, receive what’s called the fee-for-service insurance plan.

Here’s how it works: A Medicare patient goes to the doctor and receives health care services.  The doctor sends the bill for these services to Medicare, and Medicare reimburses the doctor -- with your tax dollars and borrowed money -- no questions asked.

This system increases costs and decreases quality for two reasons:

First, as you can see, the patient is very disconnected from the cost. We all pay for Medicare, through taxes or, if you’re a Medicare patient, through premiums.  But the true cost is hidden from the Medicare patient because someone else pays the actual bill.  When we pay directly for something, and we know how much it costs, we have a strong incentive to demand the best value.  In health care, we don’t.

The second reason costs are going up and quality is going down is that fee-for-service Medicare insurance has no competition -- so it reimburses all doctors and hospitals the same, even if the quality of the care they provide is poor, and the cost of their care is high.  Meaning that there is little financial incentive for doctors and hospitals to deliver the best care at the lowest price.

Many experts agree that this leads to rising costs but the disagreement is over what to do about it.

The President’s plan is to let a panel of 15 unelected, unaccountable bureaucrats decide how much, or how little, Medicare will pay doctors and which services Medicare will, or will not, pay doctors to provide for their patients.

These are price controls, and we’ve tried them before. They encourage more consumption, and they force doctors to charge their non-Medicare patients more. That pushes costs up, not down.

If we keep going down this path, many doctors will stop seeing Medicare patients altogether restricting access to health care for seniors, and leading to waiting lists and denied care.

How We Can Save Medicare

There is another, better approach.  The House-passed budget – The Path to Prosperity – saves Medicare for current seniors and strengthens it for future generations.

Those in or near retirement should not be forced to reorganize their lives because of government’s mistakes.  That’s why our budget ensures no changes for those 55 years old or older.  But for current taxpayers and future generations, we need real reform.

Rather than putting the government in charge, our plan provides financial support to help future Medicare patients pay for the insurance plan that works best for them and their families.

Patients will have the freedom to choose from a list of guaranteed coverage options – the same kind of system members of Congress enjoy today.

And insurance providers, competing for patients’ business, will look to lower the costs and increase quality for their services – the way it always works when the consumer is in charge.

Our plan also ensures lower-income seniors and those with greater health care risks will receive greater support, while wealthy seniors receive less.

The urgent need to reform Medicare and the President’s misguided approach have left us with a serious question to ask: Who should be making health-care decisions for you and your family?

A government monopoly and a panel of bureaucrats in Washington DC?

Or you?

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