Tag: Medicare

Medicare Reform: Throwing Wasserman-Schultz ‘to the Wolves’

On CBS’s Face the Nation, Democratic National Committee chair Rep. Debbie Wasserman-Schultz (FL) said this of the House Republicans’ Medicare reform plan:

Republicans have a plan to end Medicare as we know it. What they would do is they would take the people who are younger than 55 years old today and tell them ‘You know what? You’re on your own. Go and find private health insurance in the healthcare insurance market, we’re going to throw you to the wolves and allow insurance companies to deny you coverage and drop you for pre-existing conditions. We’re going to give you X amount of dollars and you figure it out.

That ‘s the version of Wasserman-Shultz’s quote that the Washington Post’s Glenn Kessler sent me.  Kessler also told me that the DNC cited me as a source for Wasserman-Shultz’s claims:

Michael Cannon: The Ryan Plan Would Provide More Subsidies To Seniors With Pre-Existing Conditions But Wouldn’t Guarantee Coverage. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “Thank you for the opportunity, Congressman. I think that lots of – all seniors under the chairman’s proposal, as I understand it, will be able to obtain health insurance coverage. And that’s the – that is because the payment they receive from the federal government to purchase that coverage will be adjusted for income so that lower-income people will get larger vouchers if you will. He doesn’t call them that, I’ll use the V word. And they’ll also be risk-adjusted so that people with severe illnesses will get larger vouchers and be able to purchase insurance coverage that will cover a lot of people who have a pre-existing condition. [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

The Actual Amount More Seniors With Pre-Existing Conditions Would Receive Had Not Been Set Out In The Ryan Budget. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “That would be a result of the rules, the specific risk-adjustment rule that haven’t been spelled out in his budget. But you would have sick people getting a lot more money.” [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

Empasis in original.

Kessler judged Wasserman-Shultz’s claim to be “bogus.”  FactCheck.org said it was “simply wrong.”

Kessler quoted me in his fact-check, but I think he left out the most important parts.  So here’s my entire email response to Kessler:

This is some high-octane idiocy.

Ryan’s plan says that insurance companies could not turn away seniors.  I’m not sure whether that means only (A) that insurers must issue a policy to all applicants (i.e., guaranteed issue) or whether Ryan’s plan would go further and (B) prevent insurers from charging sick enrollees more (i.e., price controls).  I hope Ryan would not include such price controls, but I see hints that that’s where he’s leaning.  If so, then the Ryan plan would include the very government guarantee that the DNC is complaining isn’t there.   It’d be a lousy guarantee, but it’d be there.

Regardless, the DNC’s attacks are still bunk.

If insurers can charge sick Medicare enrollees whatever they want, and Medicare gives sick enrollees enough money to cover those higher premiums, who needs price controls?  High premiums aren’t scary if you have the money to pay them.  A fair question would be whether the vouchers would be large enough.  The best evidence available (from the Dartmouth Atlas) suggests that one third of spending in traditional Medicare is pure waste.  That is a huge margin of safety: it means that the vouchers could be one-third less than what a Medicare enrollee would otherwise spend without reducing access to necessary care.  The quotes they took from me completely undercut their attacks on the Ryan plan.  I hope they keep quoting me.

Experts widely acknowledge that traditional Medicare exposes seniors to unnecessary and even harmful services.  And Medicare is rapidly consuming more and more of every American’s paycheck.  I can’t imagine anything more irresponsible than defending Medicare as we know it.

Wednesday Links

Senate Vote on Rand Paul’s Budget

Last week, a motion to proceed on a budget resolution introduced by Sen. Rand Paul (R-KY) was decisively defeated in the Senate (7 in favor, 90 opposed). Paul’s proposal would have balanced the budget in five years (fiscal year 2016) through spending cuts and no tax increases. Social Security and Medicare would not have been altered. Instead, the proposal merely instructed relevant congressional committees to enact reforms that would achieve “solvency” over a 75-year window.

That’s hardly radical.

Paul’s proposed spending cuts were certainly bold by Washington’s standards, but they weren’t radical either. For example, military spending would have been cut, in part, by reducing the government’s bootprint abroad. From the Paul proposal:

The ability to utilize our immense air and sea power, to be anywhere in the world in a relatively short amount of time, no longer justifies our expanded presence in the world. This budget would require the Department of Defense to begin realigning the over 750 confirmed military installations around the world. It would also require the countries that we assist to begin providing more funding to their own defense. European, Asian, and Middle Eastern countries have little incentive to increase their own military budgets, or take control of regional security, when the U.S. has consistently subsidized their protection.

Over 750 confirmed military installations around the world. That’s enough to make a Roman emperor blush. Isn’t continuing to go deeper into debt to subsidize the defense of rich allies the more “radical” position? (See these Cato essays for more on downsizing the Department of Defense.)

Other cuts included eliminating the Department of Housing & Urban Development, the Department of Energy, and most of the Department of Education. But unlike most Republicans, Paul didn’t apologize for the cuts or use the debt dilemma as a cop out. Instead, he explains in his plan why these federal activities are counterproductive and should be devolved to the states or left to the private sector.

It’s disappointing that Paul could only get seven Republicans and no Democrats to support his budget. For all the bluster about needing to cut spending, not raise taxes, and stop the Obama administration’s big government agenda, most Republican senators said “no dice” when given the chance to vote in favor of a plan that would accomplish all three objectives and balance the budget in five years.

On the Politics of Deficits and Debt

Today POLITICO Arena asks:

How will yesterday’s largely symbolic Senate vote rejecting the Ryan FY 2012 budget plan affect the 2012 political fortunes of Republicans, especially those facing possible Tea Party-fueled primary challenges?

My response:

Yesterday’s Senate vote was simply an effort by Democrats to capitalize on the outcome of Tuesday’s NY-26 election. It changed nothing on the ground. Responding to that election, most congressional Republicans, far from deserting the Ryan plan, have only rallied more strongly behind it.

And well they should, because there’s nothing worse in politics than disarray, as wayward moderate Republicans will likely discover in 2012. What 2010 showed was that deficits and debt are dominating our politics like never before. Democrats haven’t come to grips with that. Like Sen. Jeanne Shaheen (D-N.H.) yesterday, they castigate the Ryan plan for ending Medicare “as we know it.” Yet they have no plan of their own.

One can criticize the Ryan plan from a number of perspectives, but at least it’s moving in the right direction. If Republicans stay on course, they should do well in 2012. Columnists like the Post’s E.J. Dionne may continue to delude themselves into thinking that NY-26 marked the end of the Tea Party. I doubt it. But if he’s right, we’re really in trouble.

NY-26 Post Mortem

Today POLITICO Arena asks:

Reacting to yesterday’s NY-26 election results, Paul Ryan this morning said, “I saw the ads. I saw burning people’s Medicare cards. If you can scare seniors into thinking that their current benefits are being affected, that’s going to have an effect. And that is exactly what took place here.” Do Republicans have a messaging problem on Medicare?

My response:

Some Republicans have a messaging problem – that partially explains the NY-26 result. Others, like Paul Ryan, are telling it straight, for which they should be commended.

Medicare “as we know it” will soon end, as every honest analyst has recognized. If Democrats continue to demagogue the issue, we have a character problem on our hands. And if enough voters fall for that flim-flam, we have a national problem of lethal proportions. Hard reality doesn’t play politics.

Monday Links

Who’s Right on Medicare Reform, Ryan and Rivlin or Obama and Gingrich?

This new video, narrated by yours truly, discusses a proposal to solve Medicare’s bankrupt finances by replacing an unsustainable entitlement with a “premium-support” system for private insurance, also known as vouchers.

This topic is very hot right now, in part because Medicare reform is included in the budget approved by House Republicans, but also because Newt Gingrich inexplicably has decided to echo White House talking points by attacking Congressman Ryan’s voucher plan.

Drawing considerably from the work of Michael Cannon, the video has two sections. The first part reviews Congressman Ryan’s proposal and notes that it is based on a plan put together with Alice Rivlin, who served as Director of the Office of Management and Budget under Bill Clinton. Among serious budget people (as opposed to the hacks on Capitol Hill), this is an important sign of bipartisan support.

The video also notes that the “voucher” proposal is actually very similar to the plan that is used by Members of Congress and their staff. This is a selling point that proponents should emphasize since most Americans realize that lawmakers would never subject themselves to something that didn’t work.

The second part discusses the economics of the health care sector, and explains the critical need to address the third-party payer crisis. More specifically, 88 percent of every health care dollar in America is paid for by someone other than the consumer. People do pay huge amounts for health care, to be sure, but not at the point of delivery. Instead, they pay high tax burdens and have huge shares of their compensation diverted to pay for insurance policies.

I’ve explained before that this inefficient system causes spiraling costs and bureaucratic inefficiency because it erodes any incentive to be a smart shopper when buying health care services (much as it’s difficult to maintain a good diet by pre-paying for a year of dining at all-you-can-eat restaurants).  In other words, government intervention has largely eroded market forces in health care. And this was true even before Obamacare was enacted.

Medicare reform, by itself, won’t solve the third-party payer problem, but it could be part of the solution - especially if seniors used their vouchers to purchase real insurance (i.e., for large, unexpected expenses) rather than the inefficient pre-paid health plans that are so prevalent today.