JONATHAN CHAIT MAY 27, 2011
A few days ago, Ezra Klein posted a bunch of questions for Paul Ryan. Today, Ryan sent in his reply. His willingness to engage does speak well of him. He does understand policy better than the typical member of Congress. At the same time, Ryan reveals the degree to which he is still living in a hermetically-sealed ideological echo chamber, summoning numbers only to the point where they can appear to confirm his absolutist ideology and ignoring them otherwise.
The exchange is long, and Klein promises to follow up with comments of his own, so I'll confine myself to just the first question. I'm pasting Ryan's entire answer, which I'll discuss below the break:
In the Roadmap for America’s Future, you capped the growth in Medicare spending between inflation and medical inflation, In Ryan-Rivlin, you held it to GDP+1 percentage point. In your budget, you’ve brought it down to inflation, which is much lower, but you haven’t added any new cost controls. What makes you believe your targets are achievable? And what do we do if they’re not achieved?
Experience and economics support the view that the best way to control costs without sacrificing quality is to give consumers more power to act as a check on erratic pricing, deteriorating quality and excess care. Competition and consumer choice are the most powerful cost-control mechanisms ever devised. Our plan includes both, and that’s why we are confident that our targets are achievable.
We have evidence that this works. Our premium-support plan is modeled after the Medicare Part D prescription-drug program, in which providers compete against each other for seniors’ business. Medicare Part D came in 40 percent below cost projections done at the time of enactment – that’s almost unheard of for a government program.
Rather than shifting costs, as some have suggested, our reforms will actually bring costs down by directing financial rewards toward high-quality, low-cost providers of care and away from inefficient providers. This is a task government bureaucrats have proven time and again they cannot achieve – not because of any personal failings on their part, but simply because government isn’t suited for this task. Politics always intervenes. Part D has come in under budget every year, while fee-for-service Medicare is on pace to go bankrupt within the next ten to 13 years.
One is driven by price, competition, and choice; the other by bureaucracy and politics.
So I disagree with the premise of the question. Our reform has real cost control in it, the kind that will actually bring about more efficient and effective health care.
Some have argued that we can somehow fix this by removing elected officials from the process of managing Medicare. That we should instead empower unelected bureaucrats to achieve the results our political system has been unable to produce. Even accepting the dubious proposition that we could separate these bureaucrats from the influence of politics, or that such a thing would be consistent with our principles as a nation ruled by a constitutional, limited, and democratic government, I do not share your faith in the ability of small groups of experts to make wise decisions about treatment options on behalf of tens of millions of seniors.
That is why the House-passed budget gives patients the power to choose a guaranteed coverage option that works best for them; provides them with the financial support to purchase that plan; gives additional support to the poor and sick; gives less support to the wealthy; and limits the overall growth of the program so that we bring health-care costs down and save our country from bankruptcy.
Medicare spending continues to grow under our plan — now and into the future. Medicare nearly doubles in size over the next decade, eclipsing $1 trillion at the start of the next decade. Medicare grows in nominal terms, it grows in real terms, it grows as a share of the budget, and it grows as a share of the economy. We agree that Medicare should grow, and we also agree that it cannot grow at its current unsustainable rate. But we disagree regarding the exact growth rate and how to achieve it.
The most important thing about Ryan's answer here is that it does not address any of the questions, at all. Klein notes the following: In his first Medicare plan, Ryan imposed a cap on his vouchers at a certain rate (right between general inflation and the much-higher rate of medical inflation.) In his next plan, he set the rate even lower (general inflation plus one percentage point.) In his current plan, he sets it lower still -- at the rate of inflation. Klein understandably wants to know what has changed.
Ryan merely replies by launching a long paean to the virtues of the market, asserting that competition everywhere and always works. Regardless of whether that dynamic really applies to the highly unusual market for health insurance, Ryan is dodging the question completely. If his market magic is going to work, why does he assume it will work better than he assumed in his previous plan, and why did his previous plan assume it would work better than he assumed in the plan before that? Has the magic of the market gotten even more magical? Moreover, Klein wants to know Ryan's contingency for what happens if somehow his experiment falls short. He doesn't answer that question, either.
The next thing to note is that Ryan's non-answer is itself wrong. The sole piece of evidence he cites as proof of his market magic is Medicare Part D coming in below cost. Edwin Park explains in detail why this is completely wrong. Park's analysis is hard to summarize -- he riddles the notion full of bullets -- so I won't pull out one or two points of it. But they key takeaway here is that Ryan's only substantive basis for his non-answer is false, aside from failing to address the questions in the first place.
As for the rest of Ryan's replies, there's a ton of nonsense there, but I'll leave it to Klein because Memorial Day weekend awaits.