Representative Ryan’s $30 Trillion Medicare Waste Tax

Publication Date: April 2011

Publisher: Center for Economic and Policy Research

Author(s): Dean Baker

Research Area: Economics; Government

Keywords: Medicare; Ryan; Budget

Type: Report

Coverage: United States

Abstract:

Representative Ryan’s proposal to replace the current Medicare system with a system of vouchers or premium supports has been widely described as shifting costs from the government to beneficiaries. However, the size of this shift is actually small relative to the projected increase in costs that would result from having Medicare provided by private insurers instead of the government-run Medicare system.

The Congressional Budget Office’s (CBO) projections imply that the Ryan plan would add more than $30 trillion to the cost of providing Medicare equivalent policies over the program’s 75-year planning period. This increase in costs – from waste associated with using a less efficient health care delivery system – has not received the attention that it deserves in the public debate.