Why the Right Should Embrace “Fairness” in Entitlement Reform
This is a departure from my previous two posts; it’s not about a particular group that has pulled away from the GOP. Romney pulled a slightly larger share of older voters than McCain did, even if fewer total turned out than in previous years. That the Romney-Ryan ticket did this while proposing entitlement reform is a substantial feat, but it did involve watering down the reforms a great deal. For example, Republicans now make a habit of promising that nobody under age 55 will be affected by their reforms.
Why make this concession when the lion’s share of the fiscal problem is current retirees and the many, many Baby Boomers who will retire soon? Boomers vote, of course, but what motivates them? I don’t think most seniors could bring themselves to act on straightforward greed; I think they’re voting based on a particular concept of fairness.
Specifically, they paid into the system over a long career, and they believe they should be able to get back what they paid in. And even though current Medicare beneficiaries get two to six times as much in benefits as they paid in (if this is right), only about a third of Americans think Medicare beneficiaries get any more than they paid in. As long as they think that way, they’ll continue to oppose means testing and raising the retirement age by wide margins.
You might be tempted to say that our task is to educate them, but it’s much easier to persuade people based on their current beliefs than to convince them of inconvenient facts first. Republicans basically conceded that cutting benefits to older voters at all would be unfair, and pushed complicated plans that few people aside from Paul Ryan can competently defend.
But we might be even bolder if we just hugged that core fairness principle tighter.
September’s Reason-Rupe poll (PDF – fixed link) asked Americans if they’d support cuts to their own Medicare benefits “if you were guaranteed to receive benefits at least equal to the amount of money that you and your employer contribute into the system.” It was a blowout: 68% yes, 25% no. Three quarters of Tea Partiers said yes.
At a stroke, you could slash Medicare in half with a reform based on that principle. (Their August 2011 poll suggested similar support for applying the principle to Social Security, but the cuts would be much more modest.)
Centering a reform on that principle achieves steeper cuts and seems easier to defend than what Paul Ryan is trying. Because if Democrats fought us on it, they’d have to make the wildly unpopular case for entitlements as redistribution programs rather than as “insurance” or “savings.”
The kind of coalition the Right needs for sustainable entitlement reform has to include people who highly value fairness (or, as Jonathan Haidt would call it, proportionality). If we want the project of liberty to be successful, we have to pluck on other heartstrings.
Democratic Senator Ron Wyden tries to delink himself from Ryan Medicare plan
To date it’s been an attempt that mostly gets fussy about word usage, but my guess is it will get more pointed:
Gov. Romney is talking nonsense. Bipartisanship requires that you not make up the facts. I did not ‘co-lead a piece of legislation.’ I wrote a policy paper on options for Medicare. Several months after the paper came out I spoke and voted against the Medicare provisions in the Ryan budget. Governor Romney needs to learn you don’t protect seniors by makings things up, and his comments today sure won’t help promote real bipartisanship.
That’s obviously in reaction to a statement by Romney in which he talked about legislation, not a policy paper.
So Wyden is right, the quote is incorrect.
But Wyden is being a bit disingenuous too. You don’t vote for parts of a budget so claiming you voted “against the Medicare provisions” of a budget are a bit of nonsense as well. Democrats voted against the entire Ryan budget, the Medicare provisions being only a part of that.
Even Think Progress has some problems with the attempted delinking driven by the inconvenient politics of having a Democratic Senator’s name on a plan that Democrats have chosen to mischaracterize and demonize:
The plan Sen. Wyden co-authored with Ryan does bear a striking resemblance to the proposed Medicare changes in Ryan’s latest budget for the House GOP. Both keep traditional Medicare as a kind of public option, in an exchange where it would compete with private plans offering insurance to seniors. The government would give seniors support for purchasing these plans, and that support would be benchmarked to the cost of the second-least expensive plan. The plans would also be prohibited from discriminating based on pre-existing conditions.
Where they begin to differ is Paul supports more market based solutions while Wyden wants government based solutions.
But this sort of linkage is inconvenient when you’re claiming the GOP ticket is “trying to end Medicare as we know it” (even though it is ObamaCare which is pulling $700+ billion out of Medicare). Avik Roy has the “bottom line” on that meme:
The bottom line: if Romney and Ryan leave you the option to remain in the 1965-vintage, fee-for-service, traditional Medicare program, and you claim that Medicare has “ended as we know it,” what you’ve really ended is the English language as we know it.
Pretty much.
The point? Ron Wyden did indeed “co-author” a Medicare plan with Paul Ryan. There’s no question about that. And it was indeed a bipartisan plan, by definition. In fact the paper is entitled “Bipartisan Options for the Future” and lists both Wyden and Ryan as the authors.
Finally, their plan contains this paragraph:
We are a Democrat and Republican; a Senator and a Representative; senior members of our respective Budget Committees; and members of the committees that have jurisdiction over Medicare and health care costs. As budgeteers, we understand the difficulty presented by demographic changes over the next several decades. As members with policy oversight, we recognize and encourage the potential for innovation to improve care and hold down costs. And most important, as representatives of hardworking Americans in Oregon and Southern Wisconsin, we realize our absolute responsibility to preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s seniors for decades to come.
Sounds like a pretty bipartisan effort to me.
Here’s the problem for the Democrats. They need badly to demonize Paul Ryan as an extremist who is out to push granny over the Medicare cliff and end Medicare as we know it. That’s because “Medicscaring” seniors is a tried and true method of gaining votes, and Democrats know it. They’ve deployed it many times in the past.
And bipartisan cooperation? No way, no how, can’t let that sort of thing become public knowledge when you have an active campaign beginning to label Ryan as an extremist ideologue.
But the facts don’t support that sort of branding campaign. Not only has Ryan not attempted in any form or fashion to end Medicare, he’s teamed up with a liberal Senator to put forward a plan to actually save it (even while the loudest critic is pulling that $700+ billion from the program via ObamaCare) and make it sustainable.
How inconvenient.
That is why Wyden is trying his best to delink from Ryan. And you can imagine from whence the pressure to do so is coming. But it’s a hard sale to make when his name is clearly associated with Ryan’s on a plan he claimed will “preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s seniors for decades to come”, isn’t it?
Not that it will stop them from trying.
~McQ
Twitter: @McQandO
Facebook: QandO
Gutting Medicare to pay for ObamaCare
Perhaps you remember the “clever” accounting trick (also known as double counting) that the Democrats used to claim that ObamaCare would save money?
You know, it would cut Medicare by 500 billion (after the election, of course). You were supposed to believe that was a net cut in spending, remember? Of course it wasn’t. It was simply shifting the money to “pay” for other areas of ObamaCare. There was no “net” savings.
Well the newest projection by the CBO is that it will actually be 716 billion over 10 years (2013 to 2022) and it will essentially gut Medicare. Of course the old folks will have voted before it goes into effect.
The result of the shift of the funds? The Foundry has it:
- A $260 billion payment cut for hospital services.
- A $39 billion payment cut for skilled nursing services.
- A $17 billion payment cut for hospice services.
- A $66 billion payment cut for home health services.
- A $33 billion payment cut for all other services.
- A $156 billion cut in payment rates in Medicare Advantage (MA); $156 billion is before considering interactions with other provisions. The House Ways and Means Committee was able to include interactions with other provisions, estimating the cuts to MA to be even higher, coming in at $308 billion.
- $56 billion in cuts for disproportionate share hospital (DSH) payments.* DSH payments go to hospitals that serve a large number of low-income patients.
- $114 billion in other provisions pertaining to Medicare, Medicaid, and CHIP* (does not include coverage-related provisions).
*Subtract $25 billion total between DSH payments and other provisions for spending that was cut from Medicaid and CHIP.
The effect will be fairly substantial and should be obvious to even the most staunch ObamaCare supporter:
The impact of these cuts will be detrimental to seniors’ access to care. The Medicare trustees 2012 report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services.
In addition, as MA deteriorates under Obamacare’s cuts, many of those who are enrolled in MA (27 percent of total Medicare beneficiaries) will lose their current health coverage and be forced back into traditional Medicare, where Medicare providers will be subject to further cuts. The Centers for Medicare and Medicaid Services chief actuary predicted in 2010 that enrollment in MA would decrease 50 percent by 2017, when Obamacare’s cuts were estimated at only $145 billion. Now that the cuts have been increased to $156 billion (or possibly $308 billion, as the Ways and Means Committee estimates), MA enrollment will surely decrease even further.
But Obamacare’s raid of Medicare doesn’t stop with cuts; it includes a redirection of tax revenue from the Medicare payroll tax hike in Obamacare. The payroll tax funds Medicare Part A, the trust fund that is projected to become insolvent as soon as 2024. Obamacare increases the tax from 2.9 percent to 3.8 percent, which is projected to cost taxpayers $318 billion from 2013 to 2022. However, for the very first time, Obamacare does not use the tax revenue from the increased Medicare payroll tax to pay for Medicare; the money is used to fund other parts of Obamacare, much like the $716 billion in cuts are.
That in addition to the fact that Medicare still has 37 trillion in unfunded mandates.
Also note the tax increase in the last paragraph (yes, that would be a middle class tax increase) and how the funds will not support the program with the 37 trillion problem.
Now we can argue all we want about the existence or non-existence of “death panels”, but here we have exactly what was predicted prior to this abortion of a law being passed. Rationed care (“… cut back services to Medicare patients or close their doors, making it more difficult for seniors to access these services.”) driven by these cost cuts are defacto “death panels”.
As the Foundry concludes:
With a raid on Medicare of this magnitude, President Obama’s assertion that his new law is protecting seniors and Medicare is astonishing. The truth is that Obamacare does the opposite.
But hey, this is the same President who claims his economic policy is working too. See previous post for the reality of that claim.
The reason this cut takes place in 2013 is obvious. If seniors were aware of its impact, you know how they’d vote.
Whether you do or don’t support Medicare isn’t the point, it’s the bald faced lies that have been put forward claiming something that isn’t at all true. And now the numbers are out that prove that.
Again, something which should be front and center as a major issue in this political season.
But it won’t be.
Just watch.
~McQ
Twitter: @McQandO
Circling the drain
The NY Times has an article out saying that extended unemployment benefits are beginning to wind down. Of course that’s in the face of at least 5 million still unemployed. And while it obviously has to happen, i.e. the cut-off of extended unemployment benefits, my guess is that Democrats are less likely to want it to happen than Republicans.
In case you haven’t heard there’s an election soon.
But, that said, it does take us to a number that should concern everyone:
49.1%: Percent of the population that lives in a household where at least one member received some type of government benefit in the first quarter of 2011.
Cutting government spending is no easy task, and it’s made more complicated by recent Census Bureau data showing that nearly half of the people in the U.S. live in a household that receives at least one government benefit, and many likely received more than one.
Yes, that number. 49.1%. Why should we be concerned about it? Well if I have to explain, you most likely won’t get it anyway. Make this comparison:
The 49.1% of the population in a household that gets benefits is up from 30% in the early 1980s and 44.4% as recently as the third quarter of 2008.
That’s a very large increase from 1984. It speaks, at least to me, of dependence. Now I know the recession has somewhat skewed the numbers. Got it. And, as the unemployment benefits wind down, the number will probably drop.
But in reality it points to a trend in which more and more people depend on less and less working people to help pay their way (CBO says food stamp rolls will continue to grow through 2014). What this points too is increased government spending (no matter how you slice it – those drawing money from the government is up and that means government is spending more) in an era we can’t afford it.
With increased government spending comes the need to pay for it, and if taxes aren’t going to increase that means deficits. Nearly three-quarters of Americans blame the U.S. budget deficit on spending too much money on federal programs, according to a Gallup poll last year, but when the conversation turns to which programs to cut, the majorities are harder to find. For example, 56% of respondents oppose making significant changes to Social Security or Medicare.
Why do you suppose that is? Why would 56% oppose making significant changes to Social Security or Medicare?
Because they have a vested financial interest in the two programs. Government has, for decades, taken money out of their pay check, spent it on other things and over promised the benefits. Or to simplify it for you, they’ve grossly mismanaged the two programs to the point that anyone in the private sector would be in jail.
And yet, the number of Americans getting benefits from government continues to trend upward.
Can you not spot the big red kangaroo here?
Why is it obvious to everyone but our politicians (yeah, that’s a rhetorical question for those wondering)?
~McQ
Twitter: @McQandO
Medicare’s Doctor (and patient) trap
John Goodman poses a scenario for you to consider:
Suppose you are accused of a crime and suppose your lawyer is paid the way doctors are paid. That is, suppose some third-party payer bureaucracy pays your lawyer a different fee for each separate task she performs in your defense. Just to make up some numbers that reflect the full degree of arbitrariness we find in medicine, let’s suppose your lawyer is paid $50 per hour for jury selection and $500 per hour for making your final case to the jury.
What would happen? At the end of your trial, your lawyer’s summation would be stirring, compelling, logical and persuasive. In fact, it might well get you off scot free if only it were delivered to the right jury. But you don’t have the right jury. Because of the fee schedule, your lawyer skimped on jury selection way back at the beginning of your trial.
This is why you don’t want to pay a lawyer, or any other professional, by task. You want your lawyer to be able to reallocate her time — in this case, from the summation speech to the voir dire proceeding. If each hour of her time is compensated at the same rate, she will feel free to allocate the last hour spent on your case to its highest valued use rather than to the activity that is paid the highest fee.
None of us would ever want to pay a lawyer by task, would we (not talking about a will or legal document production here, but instead some form of defense against charges which necessitates a jury trial and requiring the accomplishment of many tasks)? We’d instead insist upon paying them for a package of services designed to do whatever is necessary to defend us to the best of their ability with the ultimate goal of us walking free.
Right?
So why is it we can’t demand the same of doctors? Why can’t we demand a package of services designed by them to address all of our medical problems?
Well if your stuck with Medicare or Medicaid, you’re stuck with government price fixing and payment by task, that’s why. First the price fixing:
Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task there is a price that varies according to location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list.
Yet Medicare is potentially setting about 6 billion prices across the country at any one time.
OK? Bad enough that Medicare has completely removed the price mechanism from the process. As economist Dr. Mark Perry notes:
These problems sound a lot like the deficiencies of Soviet-style central planning in general when the government, rather than the market, sets prices, see Economic Calculation Problem.
Exactly and stultifyingly obvious, correct? In fact, it’s something one shouldn’t have to point out. Nor, would it seem, should it be something that we’re doing either. But we are. You just have to remember, our government doesn’t care about history, because, well, you know, it will get it right where all these other governments have failed. Just watch.
If the price fixing isn’t bad enough, it has also hit upon a procedure that actually inhibits the delivery of good health care rather than incentivizing it.
Medicare has strict rules about how tasks can be combined. For example, “special needs” patients typically have five or more comorbidities — a fancy way of saying that a lot of things are going wrong at once. These patients are costing Medicare about $60,000 a year and they consume a large share of Medicare’s entire budget. Ideally, when one of these patients sees a doctor, the doctor will deal with all five problems sequentially. That would economize on the patient’s time and ensure that the treatment regime for each malady is integrated and consistent with all the others.
Under Medicare’s payment system, however, a specialist can only bill Medicare the full fee for treating one of the five conditions during a single visit. If she treats the other four, she can only bill half price for those services. It’s even worse for primary care physicians. They cannot bill anything for treating the additional four conditions.
So, for example, if you have diabetes, COPD, high blood pressure or any combination of a number of other chronic diseases, tough cookies, your doc can only treat one per visit – unless, of course, he or she wants to work for free on the others.
Don’t believe me?
[When Dr. Young] sees Medicare or Medicaid patients at Tarrant County’s JPS Physicians Group, he can only deal with one ailment at a time. Even if a patient has several chronic diseases — diabetes, congestive heart failure, high blood pressure — the government’s payment rules allow him to only charge for one.
“You could spend the extra time and deal with everything, but you are completely giving away your services to do that,” he said. Patients are told to schedule another appointment or see a specialist.
Young calls the payment rules “ridiculously complicated.”
That has nothing to do with being complicated. It has to do with stupidity overruling common sense and the stupidity being enforced by an uncaring bureaucracy. “Rulz is rulz, Doc”. Do what is best for your patient and do it for free – that’s one way to lower costs, isn’t it?
But don’t forget – government involvement will mean better care at lower cost. That’s the promise, right?
Instead government is now redefining “better” to mean “their way or the highway”. It has nothing to do with what is better for the patient or the doctor. It has to do with what is better politically. And, of course, better for the bureaucracy. In this case, that means squeezing the doctor for everything they can get at the expense of the patient. Since you don’t have a choice about Medicare when you reach 65, any doctor you see doesn’t have a choice about how he or she treats you.
The only choice you have?
Live with it … if you can.
~McQ
Twitter: @McQandO
When controlling cost becomes primary, the care given becomes secondary
The concept in the title isn’t a difficult one to grasp, yet it seems to be one that eludes any number of people who think government can cut medical care costs and improve care simultaneously.
A growing number of states are sharply limiting hospital stays under Medicaid to as few as 10 days a year to control rising costs of the health insurance program for the poor and disabled.
So what does that mean? Well, it’s a vicious circle that ends up costing more, because of one tiny problem:
In Arizona, hospitals won’t discharge or refuse to admit patients who medically need to be there, said Peter Wertheim, spokesman for the Arizona Hospital and Healthcare Association. "Hospitals will get stuck with the bill," he said.
That will most likely be the case for all hospitals.
And the result?
Advocates for the needy and hospital executives say the moves will restrict access to care, force hospitals to absorb more costs and lead to higher charges for privately insured patients.
Econ 101.
And what will happen?
Cost will continue to spiral upward for everyone.
And continue to do so.
Meanwhile:
For fiscal 2012, the association estimated state Medicaid spending will rise 19%, largely because of the end of the federal stimulus dollars.
The program served 69 million people last year.
That number will go up as millions are added under ObamaCare.
Your “cost cutting” government at work.
~McQ
Twitter: @McQandO
Study says health care costs projected to rise more under ObamaCare
Promises, promises, promises. President Obama promised the passage of the Affordable Care Act would lower health care costs across the board, making health care “more affordable”. The entire premise of the massive government intrusion in that market was to lower costs and make insurance more affordable.
A new study says that doing nothing would actually have been slightly less expensive. The irony is this isn’t some opposition think tank which has put up these numbers but the Centers for Medicare and Medicaid Services:
Despite President Obama’s promises to rein in health care costs as part of his reform bill, health spending nationwide is expected to rise more than if the sweeping legislation had never become law.
Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually.
The primary reason, supporters say, is more people will have insurance.
CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.
The federal government is projected to spend 20 percent more on Medicaid, while spending on private health insurance is expected to rise by 9.4 percent.
Anyone – do you know why “private health insurance costs” are expected to rise by 9.4%? Because the privately insured will be tapped to help pay the difference between what an expanded Medicaid base pays and what doctors charge. Or, in other words, they will be the victim of government intrusion and market distortion. And of course government is then going to point to the costs its distortion caused and claim it should help solve the problem it has created. And what will be eventual answer to those increased costs caused by government distortion be? Single-payer, of course.
This study doesn’t address the other real problem – you may expand Medicaid dramatically, but having that insurance doesn’t guarantee seeing a doctor. Other studies have shown that increasing the insurance base doesn’t decrease emergency room use, but instead increases it in the face of a building doctor shortage. And then, of course, there are those doctors who simply won’t take Medicaid (or any more than they now have) because of the low reimbursement rate.
So when the White House’s Nancy-Ann DeParle says:
“The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table,” she said. “We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.”
She’s also leaving out that part of the problem that doesn’t “show up on an accounting table” as well.
Bottom line, we were sold a lemon, a bill of goods, snake oil. All the ACA does is give the government a legal ability to intrude deeper and deeper in a market it really has no business being in at all and to distort that market even further. And that’s precisely what is going to happen. We all know that when government gets in as deep as it will be in this market, nothing ends up “costing less”.
~McQ
Twitter: @McQandO
Today’s tax rant – U2 and Medicare?
You might ask, what could McQ possibly find similar in an article about a U2 concert and an LA Times opinion piece about Medicare?
Well, you might be surprised.
Here are excerpts from the articles. First the U2 concert:
U2 and its frontman Bono, known for their global poverty-fighting efforts, were accused of dodging taxes in Ireland by activists who crashed their performance at England’s Glastonbury festival.
The anti-capitalist group Art Uncut inflated a 6-metre balloon emblazoned with the message "U Pay Your Tax 2." Security guards wrestled them to the ground before deflating the balloon and taking it away. About 30 people were involved in the angry clash.
[…]
Art Uncut argues that while Bono campaigns against poverty in the developing world, his group has avoided paying Irish taxes at a time when his austerity-hit country desperately needs money.
Ireland, which has already accepted an international bailout, is suffering through deep spending cuts, tax hikes and rising unemployment as it tries to pull the debt-burdened economy back from brink of bankruptcy."
[…]
“Tax(es) nestling in the band’s bank account should be helping to keep open the hospitals, schools and libraries that are closing all over Ireland," Art Uncut member Charlie Dewar said ahead of the protest.
U2, the country’s most successful band, was heavily criticised in 2006 for moving its corporate base from Ireland to the Netherlands, where royalties on music incur virtually no tax.
Okay? Got the gist?
Now to an article where Michael Hiltzik obviously thinks he does yeoman’s work “debunking” Paul Ryan’s Medicare plan. Here’s his underlying premise:
One of the basic flaws of Ryan’s plan is that he folds Medicare’s long-term fiscal problem into the near-term problem of the federal deficit. But these are two very different things. As Henry Aaron of the Brookings Institution observes, the current government deficit is the result of an enormous tax cut mostly for the wealthy, of paying for two wars by credit card, of the Great Recession, and of spending to address that recession. Recovery will address at least some of that, and restoring income tax rates to pre-Bush levels would go a long way toward managing the rest.
Or tax cut, spending, recession, spending. His solution? Tax and tax. Seriously when he says “recovery will address at least some of that”, he’s talking about increased tax revenue. And of course the rest of his solution is a tax increase (of course only on the “wealthy”).
Spending? Well it’s only a problem now. It becomes a lost word when it comes to solutions. His tax solutions, you see, will take care of everything. No need to cut spending.
But that’s not even the big point here. In both the U2 story and the Hitzik op/ed, a very basic assumption is made – that the money earned by the wealthy is OWED to the rest of society simply because the rest of society has gotten itself in over its head. And in the case of both stories, the wealthy are assumed to be “dodging” taxes by doing what is legal (and necessary) to protect what they earned. Their property.
U2, who would prefer to use what they earn for their own priorities (fighting poverty as it turns out), are criticized for not turning it over to be spent as the protesters think it should be spent. They actually believe they’re being cheated of their money because the band has moved to a place which doesn’t tax what they do as heavily as the country from which they originate. There’s no other reason for the protest if that isn’t their belief, is there?
So with Hiltzik and the protesters we see variations of the same theme that is so popular on the left. In essence it says that what you earn is really owned by all and they have every right to determine how much you keep – not you. That, as most of us know and understand, is a foundational concept of one of the most dangerous ideologies in the world.
Socialism.
And, as Margaret Thatcher famously said, “the problem with socialism is you eventually run out of other people’s money”.
That’s precisely what the “solutions” the protesters and Hiltzik put forward are attempting to stay, isn’t it?
~McQ
Twitter: @McQandO
Beware of broad conclusions about NY 26 by pundits
Because they’re all over the place. Many of them are trying to nationalize this very local special election by claiming it is a referendum on the GOP’s Medicare plan because a Democrat won. But it you look closely at the race, it was more of a Republican debacle than much to do with Medicare. As has been the case in many elections, competing Republicans managed to get in each other’s way (the Dem won 47% while the GOP candidate garnered 43% and the Tea Party candidate 9% – thus guaranteeing the Dem win with a plurality).
As for the Medicare portion of this, yes it was demagogued by Democrats. But as a reason for the win? Tentative at best. But it does point to a messaging problem for the GOP. I thought I understood Ryan’s plan (and, despite the usual inflammatory Democratic rhetoric, it doesn’t end Medicare at all) but to satisfy myself, I went out looking for his explanation. I found this:
How awful, no? Patient centered (bureaucracy removed), means tested, and competition. In fact, as he says, the program would be “just like the one Congress has”.
Well, wait, wasn’t that a promise of ObamaCare? Wasn’t that something we were supposed to want? Wasn’t cutting costs supposed to be the “big promise” in ObamaCare?
So here’s the plan to deliver that (oh, by the way, nothing changes for those 55 and older, so they’re grandfathered in) and the Democrats are savaging it as only Democrats can (dead grannies and the live one’s eating cat food).
If NY 26 turned on Medicare – and I don’t really believe it did – I think the GOP needs to get this video out there prominently. When I went to YouTube to find something I noticed this vid had been watched by 111 others. Not exactly viral.
You tell me – which plan makes more sense? I know which I think fulfills the promises of making health care more affordable and competitive.
~McQ
Twitter: @McQandO
Ryan budget proposal: you can pay me now or you can really pay me a heck of a lot later (updated)
Problem: As a nation we’re in dangerous debt territory. If we don’t do something quickly and dramatically, we’re headed for some very rough and painful times.
But while it seems the American public senses this on the whole, polls seem to indicate that all the “free” stuff handed out by government is popular with a large percentage of the population. Or said another way, they understand that we have a debt problem, they understand the implications of that problem and they don’t mind spending cuts – just so the spending cuts don’t effect programs they like.
The problem is further compounded by an irresponsible administration which gives the debt problem lip service but submits budgets that exponentially increase the problem:
The president’s recent budget proposal would accelerate America’s descent into a debt crisis. It doubles debt held by the public by the end of his first term and triples it by 2021. It imposes $1.5 trillion in new taxes, with spending that never falls below 23% of the economy. His budget permanently enlarges the size of government. It offers no reforms to save government health and retirement programs, and no leadership.
Both of these facts make it hard for those who would actually like to address the problem of debt before it overwhelms us. That’s because they’ll really get no support politically from the administration, no call to arms and leadership, and the American people are proving to be fickle about the whole process sending very mixed signals.
Solution?
Well the obvious solution is to find some means of cutting spending to at least the level of revenue and to begin working to pay the debt down in an earnest and timely manner. What isn’t a solution is business as usual but on steroids as proposed by the President. So today, Rep. Paul Ryan (R-WI) introduced the GOP plan to address the problem. Or at least part of the problem. That of out-of-control spending and addressing the debt. How it will play with the American people remains to be seen, but it is both an earnest and timely proposal. It also makes some pretty dramatic cuts which is where you can expect to see the pushback.
For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.
But there’s pain in them thar words. And it means things are going to have to be quite different in some areas than they are now. Government is going to have to be rolled back. That is unless we’re partial to a complete collapse of our economy and our currency, hyper inflation and all the good times those developments would bring.
So to specifics in Ryan’s proposal. Addressing welfare in general, he says:
This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.
As we strengthen and improve welfare programs for those who need them, we eliminate welfare for those who don’t. Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration.
I am quite pleased to see the second paragraph. It is indeed time to eliminate “corporate welfare” and subsidies for favored industries. It also takes on what we would call traditional welfare. And make no mistake about it Medicaid and food stamps are welfare. As for the “perverse incentives” Ryan points too, here’s what they’ve yielded recently:
I’m sure some of that comes with the economic downturn, but it also indicates the effect of the incentives to sign people up for the welfare program.
We can’t afford the level of welfare we’re paying out now – and that included corporate welfare and subsidies. We are a compassionate people, but I end up shaking my head when I hear government officials claiming that people at “4 times the poverty level” need help? Really? So what’s the purpose of the poverty level as a measure and why are we now convinced we have to “help” people well above that level?
Then there are the twin third rails of politics, but areas where dramatic reforms are absolutely necessary to get us on the right fiscal track as a country. And those are Medicare and Social Security. The Ryan plan:
Health and retirement security: This budget’s reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.
Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.
In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.
I’ve already seen some on the left characterizing this as "privatizing" Medicare. And, of course, as we all know, that’s dangerous as government always does it better – look at the budgets for example. Look at the debt.
In fact, what Ryan is talking about is giving seniors a choice vs. automatically enrolling them in a government insurance program that averages about $60 billion a year in waste, fraud and abuse. There will be a subsidy – probably means tested. Is the the ideal libertarian answer? No. But as I’ve said before, freedom is choice and any legislation that expands that is at least a step in the right direction.
We must also reform Social Security to prevent severe cuts to future benefits. This budget forces policy makers to work together to enact common-sense reforms. The goal of this proposal is to save Social Security for current retirees and strengthen it for future generations by building upon ideas offered by the president’s bipartisan fiscal commission.
Perhaps raise the caps (I gave a certain percentage to my 401k regardless of how much I earned, so doing the same with Social Security doesn’t really bother me. And it will provide increased revenue for the fund. Again, ideal? No, but then I don’t consider either Medicare or Social Security to be “welfare” since most participants have paid into those systems for their entire working life. But there are changes which will have to be made. I don’t favor means testing if the cap is raised. But I do think that a hard look at the retirement age is necessary. My ideal outcome, obviously, would be getting government out of the retirement income business, but that’s not going to happen. So Social Security has to be made self-supporting and not a drain on the budget – as does Medicare.
Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
If we don’t get some restrictions on government spending, nothing is going to change. Nothing. We’ve watched Congress talk the talk for decades, ala Nancy PAYGO Pelosi. But they ignore their own legislation and policy at will. As Ryan says, there have to be “real, enforceable caps on spending”. I interpret that as “you cannot and will not spend more than you take in”. We’ll see how the Congress interprets that.
Tax reform: This budget would focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.
Here is something that is going to be as hard to do as entitlement reform. Why? Because the tax system provides Congress with another way to wield its power. But the way it has wielded this power has done precisely what Rep. Ryan points too here – it has “distort[ed] economic activity.” Make the system simple, remove the loopholes, broaden the base (get some more “skin” in the game from those who now don’t pay taxes) and my guess is you’ll not only see an increase in revenue, but a far greater increase in economic activity.
Bottom line: We are in a “you can pay me now or you can pay me later” moment. And if we wait, we’re going to be paying a price we’re just not willing to pay, all because we chose to avoid the pain now. I’m sure the opponents of this proposal are going to call it “extreme” and something that will “hurt the children”. Trust me, if you want to see extreme, put it off until this house of cards collapses. And if you want to avoid “hurting the children”, man up and face the pain now to avoid it later when it really will “hurt the children”.
UPDATE: Chris Edwards at CATO gives his take on the Ryan budget. I’m pretty much agreed with everything Edwards says:
- Ryan doesn’t provide specific Social Security cuts, instead proposing a budget mechanism to force Congress to take action on the program. It is disappointing that his plan doesn’t include common sense reforms such raising the retirement age.
- Ryan finds modest Medicare savings in the short term, but the big savings occur beyond 10 years when his “premium support” reform is fully implemented. I would rather see Ryan’s Medicare reforms kick in sooner, which after all are designed to improve quality and efficiency in the health care system.
- Ryan adopts Obama’s proposed defense (security) savings, but larger cuts are called for. After all, defense spending has doubled over the last decade, even excluding the costs of wars in Iraq and Afghanistan.
- Ryan includes modest cuts to nonsecurity discretionary spending. Larger cuts are needed, including termination of entire agencies. See DownsizingGovernment.org.
- Ryan makes substantial cuts to other entitlements, such as farm subsidies. Bravo!
- Ryan would turn Medicaid and food stamps into block grants. That is an excellent direction for reform, and it would allow Congress to steadily reduce spending and ultimately devolve these programs to the states.
- Ryan would repeal the costly 2010 health care law. Bravo!
Here’s a chart Edwards includes in his post:
I’m a huge supporter of military spending in order to maintain our national security and technological edge, but I find it hard to believe that there aren’t many places where savings could be accrued in “Security”. And I’d also note under the broad “Security” umbrella fall many other programs that could be cut – like the entire TSA. But, in any event, it is an area that should also be looked at with an eye for cutting spending. It would get us to our goal of paying down the debt even sooner and it can be done without jeopardizing our security (cut costs not capability).
UPDATE II: Geoff over at Ace of Spades gives a little context to the Ryan proposal:
Now, where I come from, the “extremes” are on either side of a situation, right?
~McQ