Special Guests: Michael Cannon - Cato Institute Health Care Policy Studies Director

NEIL CAVUTO, HOST: Well, you know, that is very good point. Newt dissed this. Star Parker, always fun. Thanks. All right. By the way, now the scariest thing as Star and I pointed out, you know, doing nothing at all.

Cato's Michael Cannon says that is what really worries him. Because if we do nothing at all, Michael, what happens?

MICHAEL CANNON, THE CATO INSTITUTE: Well, Paul Ryan has provided answer. He asked the Congressional Budget Office a couple of years ago what would happen if we did nothing, if we just let Medicare and Medicaid and social security grow, kept all the promises that we have made to seniors? And what CBO said is that by the time my son is in his peak earning years he would be paying tax rates that are double of what we are paying right now. And -

CAVUTO: How old is your son?

CANNON: He is two years old right now. And so, that is if he has a job at all because the economy would be five to 20 percent smaller than it would be if we kept today's tax rates. So that's the future that we're facing. A smaller economy, fewer jobs and much higher taxes unless we cut Medicare and Medicaid spending.

CAVUTO: But we don't, tell you, Michael, here's what worries me. You've got everyone says he's the Fox guy talking about the complicit mainstream media. But the fact of the matter if you had any doubt that the media ignores stuff like this, the media ignored this today.

I chose not to pounce on it to show the fear-mongering because the media made a very big deal of the death panels and everything else being a mountain out of a mole hill. And then saying that something that didn't exist when in fact it did when we have a 14-doctor advisory panel that will be doing just as some Republicans feared. That got ample coverage back then. This gets no coverage now.

CANNON: Well one thing that needs to be highlighted about this ad it is not the Republicans or Medicare vouchers that would throw grandma out of a wheelchair. What is throwing grandma out of a wheelchair right now is Medicare. Paul Ryan's reforms would actually improve the quality of care for seniors.

But the Obama administration knows that Medicare is exposing senior citizens to unnecessary procedures, exposing them to deadly medical errors. That is why Don Berwick is trying to reshape the way Medicare delivers health care to people with these so-called accountable care organizations.

By the way, he is failing because he is relying on same command-and- control tactics that Medicare always uses. It's because they know that Medicare is what's throwing grandma out of the wheelchair.

CAVUTO: But you Michael said -

(CROSSTALK)

CANNON: Paul Ryan wants to avoid that.

CAVUTO: Well, here is bigger one. Everyone says, Neil, you're chastising Republicans too soon. Give them time. When the Senate Republicans abandoned the House and more to the point, what Paul Ryan is trying to do on Medicare, I think they're afraid. I think they're dropping the ball.

And I think right now this moment we have to address these entitlements, at least slow their growth, because we're not talking about cutting them, it's slowing their growth is gone. And every time you even mention, touching something, it's like the third rail. And you know, they're electrocuted.

CANNON: I think that's why we have to emphasize that the reforms that passed the House of Representatives would actually improve the quality of care for senior citizens. I'm sorry, not for senior citizens. As Star said, only for people currently under age 55.

CAVUTO: But they don't, Michael. They don't.

(CROSSTALK)

CAVUTO: And that gets back to the media that is not even hearing it. That gets back to the media that's not even hearing it. All I ask some of my media colleagues to do, you're fine if you love, love what you have and you love what the president is planning, that's fine, go ahead. Would it kill you to show the pros of some of the alternatives? That doesn't happen. Hence an ad like this gains traction and currency.

CANNON: Well, let's give one of the pros of the Ryan plan. The Ryan plan is modeled on pretty much the Medicare advantage plan where about one- fifth of senior citizens are able to choose a private health insurance plan. What President Obama is trying to do is move seniors into accountable care organizations. That just means get doctors to talk to each other about the care that they provide to shared patients so you get less duplication, fewer errors, that sort of thing.

One of the examples of so-called accountable care organizations is Kaiser Permanente. The CEO of Kaiser Permanente says "Look what Obamacare is trying to do as not nearly as good as what Medicare advantage is already doing in terms of encouraging coordinated care." That right there is one of the advantages of the Ryan plan over Obama care.

CAVUTO: Michael, always good having you. Thank you very much. Michael Cannon.

CANNON: Any time.

CAVUTO: From Cato. I'll just leave you folks for this piece here with one final note on this subject with this concern about what's going to be curtailed about Medicare. Here is a little after statistic for you. The president's health care plan as it stands now over the next decade trims half a trillion dollars from Medicare. Ostensibly on the idea that it's going to exact great cost savings. But not before half a trillion dollars just taken out of Medicare. We cite. You decide.