Medicare Is the Solution, Not the Problem

Paul Krugman shows that Medicare is much better at controlling costs than private insurance:

If Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper.

There’s no mystery here. Bigger risk pools control costs better than smaller risk pools.

If everybody joins Team Medicare, Medicare will have more market power to push down the growth in health care suppliers’ prices, just like Amazon and Walmart push down their suppliers’ prices.

If we do what Paul Ryan and Charlie Dent want to do, and everyone splinters off into many different small private teams, then no one has enough market power to push down the growth in health care suppliers’ prices.

That is why CBO says health care costs would double for the typical senior under RyanCare:

Why Young People Need to Be Supervoters

Mark Schmitt lays out the generational politics of the Paul Ryan budget, and reminds us why young people need to vote every November, not just in Presidential years, no excuses:

If there was ever going to be a generational war in this country, that high school class of ’74 would be its Mason-Dixon line. It’s the moment when Bill Clinton’s promise—“if you work hard and play by the rules you’ll get ahead”—began to lose its value. Today’s seniors and near-seniors spent much of their working lives in that postwar world, with their incomes rising, investments gaining, their health increasingly secure, and their retirements predictable. Everyone 55 and younger spent his or her entire working life in an economy where all those trends had stalled or reversed. To borrow former White House economist Jared Bernstein’s phrase, it was the “You’re On Your Own” economy. Finally, those 55-year-olds are spending several of what should be their peak earning years, years when they should be salting away money in their 401(k)s and IRAs, in a period of deep recession and very slow recovery.

The Ryan plan, in other words, delivers to the older generation exactly what they’ve had all their lives—secure and predictable benefits—and to the next generation, more of what they’ve known—insecurity and risk. It’s hardly the first generational fight the GOP has started. The previous one was just last fall, when they campaigned for Medicare, and against the $500 billion in cuts (mostly by getting rid of the overgenerous subsidies to private insurers in an experimental program) passed as part of the Affordable Care Act. With an off-year electorate that was overwhelmingly older, they could put all their bets on the older side, knowing that seniors would see little benefit from the Affordable Care Act and were naturally worried about any change to the health system they enjoyed.

Charlie Dent Thinks You’re Not Paying Enough for Health Care

Jared Bernstein explains why the Medicare privatization plan that Charlie Dent supports will double health care spending for seniors:

Importantly, the value of those vouchers start well below where they need to be to enable seniors to afford coverage comparable to Medicare today (in fact, beneficiaries costs would have to double), and their value falls increasing behind coverage costs over time.

Suppose you send me to the grocery store to buy you a gallon of milk. Milk costs $3.50 a gallon but you give me $2. I spend the whole day “denying business to inefficient providers”—i.e., grocers who all charge more than that—and at the end of the day, bring you back a pint.

Now, instead of milk, where I’ve got the information I need to be a smart shopper, suppose you give me the same under-priced voucher but ask me to bring you back a plan for treating that strange pain you’ve been experiencing on your left side on humid days.

There’s no “denying business to inefficient providers” in the Ryan plan because there’s no market discipline that average folks with incomplete information armed with an inadequate voucher can enforce on a private health insurance market that’s…well, different.

Pat Toomey’s Budget is Somehow More Extreme Than Paul Ryan’s Medicare Repeal Budget

Pat Toomey’s budget went down in the Senate, but it’s worth pointing out that it was even more nutty than Paul Ryan’s Medicare repeal plan. CBPP gave it a brutal review yesterday, so head over there for the gory details. The thing I think reporters have failed to get across is how much of a fraud this guy is. Toomey sure talks a lot about the deficit, but the man doesn’t have any credibility on the issue. Just look at the projections his plan is based on. It’s a bunch of goofy supply-sider mythology:

Achieves no actual deficit reduction from revenues. The plan assumes that its proposed “tax changes will be revenue neutral when scored statically…” compared to the revenues that the federal government would collect under current policies (that is, if all expiring tax cuts, including President Bush’s tax cuts that benefit high-income taxpayers, are made permanent). But Senator Toomey claims that eliminating loopholes, collapsing the current personal income tax rate structure into three brackets with lower rates, and cutting the corporate income tax rate from 35 percent to 25 percent “will generate strong economic growth, which will in turn yield surging tax revenues.” Based on this rosy economic scenario, which is more optimistic than the CBO projections that the Ryan plan employed, and on seemingly fanciful estimates of the taxes that the government will collect relative to the assumed size of the economy,[2] the Toomey plan claims revenues will be $1.4 trillion higher over ten years than what the Ryan plan assumes with similar tax policies.

Senator Toomey mistakenly claims that the economic assumptions behind his budget are less optimistic than those of the Ryan plan. But, while Chairman Ryan asserts that his tax plan would boost economic growth, the revenues (and spending, deficits, and debt) shown in his plan are based on CBO’s baseline economic projections — not on the more optimistic economic path he believes would result from his plan’s enactment.

I’m not saying journalists have to be as mean as I am about it, but this is the sort of thing you can look up. Where’s Toomey getting that extra $1.4 trillion in revenue from? That would be a very good topic for a news story in which you talk to economists and figure out whether he’s right. Journalists have much more time to look up things like this than their readers do.

Scott Brown Explains How RyanCare Increases Health Care Costs

Scott Brown comes out against Paul Ryan’s plan to end Medicare, which Charlie Dent favors. Here he is explaining how it will increase premiums for all seniors, including current beneficiaries:

First, I fear that as health inflation rises, the cost of private plans will outgrow the government premium support— and the elderly will be forced to pay ever higher deductibles and co-pays. Protecting those who have been counting on the current system their entire adult lives should be the key principle of reform.

Add Brown to the growing Gingrich/Toomey/McConnell group of Republicans who don’t want to sign the House Republican political suicide pact.

House Republican Leadership BTUs Charlie Dent

Republicans are getting spooked at the backlash against their Medicare phase-out, and their leaders are now suggesting they will BTU vulnerable members like Charlie Dent who already voted for it by totally scrapping it from budget negotiations.

Obviously this is a political disaster for Dent in 2012, since his opponent will be able to accuse him, with 100% accuracy, of voting to end Medicare after campaigning against Medicare cuts in 2010.

On the substance of deficit reduction, it’s important to understand that the Medicare privatization plan was doing all the heavy lifting in the Paul Ryan budget. If it gets abandoned, as seems likely, then there’s no deficit reduction:

It turns out that if you strike the Medicare plan from the GOP budget — authored by Rep. Paul Ryan (R-WI) — it doesn’t achieve fiscal balance anymore.

“It certainly blows a major hole in his plan,” said Paul Van de Water, a health care and budget expert at the Center on Budget and Policy Priorities, in a phone interview.

If you take Ryan at his word, and assume that the tax-side of his plan is revenue neutral — a big “if” — his plan balances the budget over decades entirely on the spending side of the government’s ledger. Van de Water explains that if you take the Medicare privatization plan out of the equation, the budget sinks — dragged down by higher spending, and then higher interest payments as a result of larger-than-projected deficits.

“That plus interest gets you into a range where you no longer balance the budget,” Van de Water said.

A Very Serious Plan

I think this illustrates pretty persuasively how absurd the Republican position on the deficit is, that all tax increases are off the table. Obviously there is room to collect a lot more revenue without doing damage to economic growth, especially if this involves ending tax expenditures that stifle growth, like the exemption for employer-provided health insurance and the mortgage interest tax deduction.

Instead, Charlie Dent and Paul Ryan want to make the deficit bigger with a huge new tax cut for high earners:

It’s hard to understand how anyone could take the view that this proposal is “serious.” It increases the public debt over the next 10 years, and then pinky swears that some future Congress will end Medicare.