Who is going to end up making all the money in the end if Obamacare continues to be in place?” Republican National Committee chairman Reince Priebus growled Monday on Sean Hannity’s Fox News show. “It’s going to be the big corporations, right? And who gets screwed? The middle class.”
The Republican Party makeover is breathtaking. Now, suddenly, instead of accusing Democrats of being “redistributionists,” the GOP is posing as defender of the middle class against corporate America — and it’s doing so by proposing to do away with the most progressive piece of legislation in well over a decade.
Paul Ryan’s new budget purportedly gets about 40 percent of its $4.6 trillion in spending cuts over ten years by repealing Obamacare, but Ryan’s budget document doesn’t mention that such a repeal would also lower taxes on corporations and the wealthy that foot Obamacare’s bill.
This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington. This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington.
“No pre-ex’s, community rating, guaranteed issue.”
“No, that’s Obamacare stuff,” I said to my colleague, as she read a summary of Congressman Paul Ryan’s House Republican budget plan released on Tuesday. “Everyone in Medicare already has those. You must have the wrong memo.”
She scrolled to the top of her iPhone and pointed at the screen. “Summary of the Ryan Budget Plan – Medicare.”
“Maybe just a gimme for popular support?” I speculated, knowing from headline coverage earlier in the day that the Ryan plan sought to repeal Obamacare, not strengthen its most popular consumer protections. “Guaranteed issue but no mandate — that would sure hang the insurers out to dry. But why would you put that in a budget?”
“Here’s why,” she read. “‘Seniors buy coverage through new Medicare Exchange.'”
Consumers need protections only when they are turned into consumers. And that is what Congressman Paul Ryan’s budget seeks to do for — or do to, depending on your feelings about medical capitalism — future Medicare beneficiaries.
Let’s take a look at Mitt Romney’s Health Care plan using his own outline (“Mitt’s Plan”) on his website.
Romney’s approach to health care reform summarized:
- “Kill Obamacare” – There seems to be no chance Romney would try to fix the Affordable Care Act––he would repeal all of it.
- No new federal health insurance reform law – There is no indication from his policy outline that he would try to replace the health care reform law for those under age-65 (“Obamacare”) with a new federal law–his emphasis would be on making it easier for the states to tackle the issue as he did in Massachusetts.
- Small incremental steps – His approach for health insurance reform for those under age-65 relies on relatively small incremental market ideas when compared to the Democrats big Affordable Care Act–tort reform, association purchasing pools, insurance portability, more information technology, greater tax deductibility of insurance, purchasing insurance across state lines, more HSA flexibility.
- Getting the federal government out of the Medicaid program – He would fundamentally change Medicaid by putting the states entirely in control of it and capping the annual federal contribution–“block-granting.”
- Big changes for Medicare – Romney offers a fundamental reform for Medicare beginning for those who retire in ten years by creating a more robust private Medicare market and giving seniors a defined contribution premium support to pay for it.
It was the worst of systems. It was the worst of systems.
For decades, policy analysts have debated how we to strike a proper balance among access, quality and cost in our healthcare system. This debate has missed a crucial point: we do not have one healthcare system, we have two. And both are broken. Fortunately, if we fix one the other may heal itself.
The first system is the one that we encounter when we seek treatment for an illness. This system defines how much we pay out of pocket, which depends which providers we seek and what treatments they deliver. This system also defines how much our providers are paid, including rewards for exceptional quality and penalties for substandard quality. Historically, patients have relied on their physicians to guide them through the complexities of this system. In recent years, supporters of consumer-driven healthcare have argued for a bigger role for patients. They make the important point that patients will never make a serious effort to balance access and quality against cost unless they are responsible for all three.
Now that Mitt Romney has picked Paul Ryan to be his running mate, a major national debate on Representative Ryan’s so-called ‘premium support’ plan has become certain. Ryan’s plan would replace the current Medicare program for workers under the age of 55. When eligible, they would receive a flat dollar amount—or voucher—that would cover part of the cost of a health insurance plan. The value of the voucher would be adjusted annually according to a pre-specified index. If health care costs increased faster than that index, enrollees would have to pay the added cost themselves or accept narrowed insurance coverage.
Because that plan would not apply to anyone age 55 or older, supporters claim that older Americans don’t ‘have a dog in that fight.’ For reasons I explain below, that isn’t true, even if one looks only at Representative Ryan’s Medicare proposal. Other elements of the Romney/Ryan health care program have even larger implications for older Americans, but let’s start with the Ryan Medicare plan.
Costs for Seniors Could Rise
The claim that the Ryan plan leaves American’s over age 55 unaffected is untrue because it is likely to raise the amount they have to pay out-of-pocket for insurance. The reason is technical, but easy to understand. The premium for those who stay in traditional Medicare under the Ryan plan would be calculated as under current law, but the average cost of serving those who remain in traditional Medicare would go up as private insurance companies market selectively to those with relatively low anticipated costs.
I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.
As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try to make sense of it.
This blog post is quite long because the subject matter is complicated. If you want to cut to the chase, see my conclusion and summary at the end of this post.
Allow me to list a few of the questions people are asking and give you my take on it.
Will current seniors suffer under the Romney-Ryan Medicare plan?
No. Let me start by saying something that will likely surprise you. If I could be king for a day, I would prohibit anyone over the age of 60 from voting in this election. This election is really about the future and the big decisions on the table are about the long-term government spending and entitlement issues that should be made by younger voters who will have to pay for them and will benefit or suffer from them.
Those in their 60s and older are almost surely going to cruise to the end with the benefits they now have.
Whether its Obama’s Medicare plan, based heavily on the Medicare cost control board imbedded in his health reform bill (which doesn’t begin to impact hospital costs until 2020), or the Romney/Ryan Medicare premium support plan (that has no effect on anyone now over the age of 55), today’s seniors’ benefits are insulated from this issue.
Republican Vice Presidential pick Paul Ryan isn’t the only one Democrats are piling on this week. The knives have come out for Senator Ron Wyden, the Oregon Democrat.
I guess that isn’t a surprise. If Ron Wyden is right on Medicare then so are Paul Ryan and Mitt Romney.
The fundamental problem here is that the Democrats have decided that their best path to victory in the November elections is to say that the Republicans want to destroy Medicare as we know it and that the Democrats can preserve it.
The truth is that no one can preserve Medicare as we know it. There isn’t a prayer that your father’s Medicare will be around in 10 years. There is a legitimate policy debate going on about the direction we will have to go with it.
There is just plain going to be less money to spend on senior health care than there would have been if we let the program continue on its present unsustainable track. Health care providers and patients are going to have less money.
The question is who will control that money.
Last week, I noted the significant differences between Paul Ryan’s proposals, from his 2012 budget to Ryan-Wyden to his 2013 budget. I also noted that while it would be tempting to campaign against the 2012 budget, which massively shifted costs onto seniors, his later proposals did that to a far lesser extent.
Or did they?
Governor Romney has endorsed Paul Ryan’s latest plan, which is specific in that it will reduce future Medicare spending by unleashing the power of the free market through competitive bidding. But what if that doesn’t happen? Well, just like the ACA, his law backstops the growth of Medicare spending at GDP + 0.5%.
The ACA is explicit about what will happens if growth goes above that amount. The IPAB will make recommendations on how to cut it. Congress will have to override those recommendations to stop them, and have their own ideas that save just as much. It’s likely those recommendations would involve reducing provider payments. But it’s the hope of those who support the ACA that other provider-based changes, like ACO’s and the excise tax, will keep the IPAB from having to act.
The United States faces large federal budget deficits over the short-, medium-, and long-term. Although perhaps subject to the greatest public attention, the short-term deficits are generally thought to be helping the economy recover. In contrast, medium- and long-term deficits projected for years after the economy returns to full-employment are a source of concern: these deficits will create growing and serious burdens on the economy even if they do not lead to an immediate crisis. Economists of all political stripes agree on this point.
While extending the Bush tax cuts, if that occurs, will play a big role in making the medium and long-term deficit problems worse, economists agree that a key driver of the long-term deficit problem is growth in government spending on health care. Medicare and Medicaid, our two largest health spending programs, currently account for 23 percent of federal spending, or 5.6 percent of GDP. Under current law and optimistic assumptions for health spending, the Congressional Budget Office (CBO) estimates these programs will represent 30 percent of total federal spending (6.8 percent of GDP) by 2022 and will continue to grow thereafter.
The prospect of health-driven deficits has produced a burst of proposals for reform. Sadly, the simple truth is that we do not yet know how to reform government health programs to both rein in costs and maintain or improve quality and access.
I once called an older version of Paul Ryan’s budget plan “voodoo economics.” But you have to admire him. He has just released a new plan that slashes the deficit from 8 percent of GDP to around 1 percent by the end of the decade while simultaneously keeping revenues at 18 percent of GDP over the decade, very close to their historical average. To be sure, the specific policies required to get there are not well specified and there is much that I don’t like, such as the assumption that we don’t need new revenues to close the fiscal gap; still, after reading the “Path to Prosperity” I came away with a sense that there is food for thought, worthy of further discussion and debate, in this document.
I came to this conclusion after reading the section of the document called “repairing the safety net.” I had figured out that a lot of the savings in this plan had to come from slashing programs for the poor so I expected to be horrified by what I read. I am not in favor of cutting programs for the poor, especially in a plan that reduces taxes for the wealthy and leaves Social Security virtually untouched. Instead, I found myself at least intrigued with the arguments that I found in this section of the plan. They are thoughtful, well-articulated, and worthy of further debate.
One argument is that federal subsidies for safety net programs encourage states to spend more than they otherwise would. Another argument is that federal dollars come with federal prescriptions and paperwork that stifle state innovation and efficiency. A third argument is that these programs undermine efforts by civic or faith-based groups to play a stronger role. A fourth argument is that some of these subsidies (for example, Pell grants) simply bid up prices (for college tuition). A fifth argument is that we have too many overlapping and complex programs with similar purposes (job training being a great example). A sixth argument is that assistance should be made conditional on personal responsibility—for example, being engaged in work or job training if you are receiving government assistance. This model of conditional assistance was a key element in the largely successful 1996 welfare reform law and could be expanded to other programs. Finally, the plan emphasizes the importance of upward mobility—a goal which I think many can embrace.