As the fallout over the Standard & Poor's downgrade makes clear, getting the country's future finances under control will require going beyond the spending-growth reductions in the Budget Control Act of 2011 and making fundamental changes to our entitlement programs, especially Medicare. To make the Medicare program fiscally sustainable, reform must: (1) place limits on spending growth and (2) change the program to hold actual spending growth to these limits.
There are two major approaches to achieve these ends. On April 6, House Budget Committee Chairman Paul Ryan put forth a plan that transforms Medicare into a marketplace of regulated, private-insurance policies with government-provided support for insurance premiums. On April 13, President Barack Obama proposed an alternative that retains the program's current structure with the overlay of a new, centralized bureaucracy.