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Chairman Ryan: Choice and Competition Will Increase Quality, Decrease Costs in Health Care

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Published on Jun 23, 2011

One of the key principles underlying the reforms in The Path to Prosperity budget is that when providers compete against each other for a patient's business -- costs go down and quality goes up.

We have seen this play out in the Medicare Part D (prescription drug) program. Part D has come in 40 percent below cost projections. While part of those savings can be attributed to lower-than-expected enrollment, Medicare's chief actuary has calculated that nearly 85 percent of the program's savings were "a direct result of competition and significantly lower Part D plan bids."

The reforms in the House-passed budget are modeled after these kinds of reforms: seniors choose from a set of guaranteed, Medicare-approved coverage options. Yet CBO's analysis did not model the long-term downward pressure on health care costs that would result from the effects of choice and competition.

Any attack on The Path to Prosperity's plan for Medicare that assumes health care costs will keep spiraling upward are failing to account for the beneficial effects of competition and choice.

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