JONATHAN CHAIT MAY 27, 2011
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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.
21 comments
Well, you can't exactly fault him for trying to defend the indefensible with pabulum. Read between the lines here: he's trying to respond by being honest, and this is honestly the best argument that can be brought to bear. The fact that it's hooey shows us that maybe the media should more honestly depict what's going on here. The current magazine's telecom article is very helpful in this case: it looks at how a "natural monopoly" evolved. I find this to be instructive because conservatives seem to miss the point that screaming "freedom" at an industry does not magically make it a free market. You either have heavily regulated private utilities or a government-operated system. Since the former has proven to be an unstable equilibrium, wherein an entire party of Paul Ryans push deregulation to "cure" the market, it's pretty clear that this country should probably opt for a government-operated system. For the damage that Medicare Advantage does to Medicare is much, much less of a worry than the damage that a deregulatory race to the bottom among the states does to private insurance.
- chaitless
May 27, 2011 at 4:36pm
Inflation; is that medical inflation or general consumer inflation? There's a massive difference. JC, any upcoming comments/posts on the recent Supreme Court ruling in AZ's immigration laws, the WI judge's ruling on the public sector unions and the federal court ruling on direct corporate contributions?
- tmmats
May 27, 2011 at 4:38pm
God, what pablum and nonsense. It's like talking to a Mormon missionary of 17 years old about theodicy. One could say it's to his credit that he actually appears to believe what he says. But I am not sure that's true.
- miceelf
May 27, 2011 at 4:38pm
I love that picture of Ryan. Looks like he's doing an impression of Dr. Evil talking about his "laser".
- tmmats
May 27, 2011 at 4:45pm
Well, the old adage can be updated...How do you tell when Paul Ryan lies? - His lips move. This is particularily funny: 8) Is it fair to reduce spending on Medicaid even as we cut taxes on the rich? Fraud boy: "This question begins with a false premise. First, our budget does not cut taxes on the rich ...And it proposes revenue-neutral tax reform, which promotes economic growth by lowering individual and corporate tax rates for everybody while eliminating tax credits and deductions that distort economic activity and go mostly to the well-off." BWHAHAHAHA!!! As Frum states: "Ryan’s plan cuts the top rate of personal and corporate income tax from 36% to 25% with promises of offsetting revenue raisers to be determined later. Because Ryan’s tax cuts were specific and his promises of revenue-raising reform ultra-vague, he had no defense to the attack that his tax reform involves massive downward redistribution of the tax burden. And after all, it’s hard to imagine what tax enhancements would counteract the distributional effect of a cut in the top rate of income tax from 36% to 25%. " Come on Fraud boy stop being coy...tell us how you are going to give that big upper income cut and somehow not raise capital gains taxes, etc. and it will be not a tax cut on the rich! Tell us the carve outs you are ending.
- MikeB.
May 27, 2011 at 5:06pm
Wait! Wait! I've got it. I've GOT it! Mr. Rationale is . . . Paul Ryan after a hard day, several drinks, and a crude effort to disguise himself. This explains everything.
- timteeter
May 27, 2011 at 5:46pm
timteeter: Perfect.
- cspencef
May 27, 2011 at 6:33pm
Ryan: "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." Someone needs to ask this guy how all of our peer nations manage to provide health coverage to everyone, obtain comparable health outcomes to ours, while spending a third less to half as much as we do. I don't know what "experience and economics" he's referring to. Experience shows that the private market has done a lousy job holding down health care costs. And there are plenty of economists who have explained why this is so. Ryan just chooses not to listen to them or look at the data because that might conflict with his unshakable free market fundamentalist view that markets work every time, everywhere. I like markets too, but I'm not going to ignore clear evidence that they don't work very well in some instances. (Other examples: higher education where costs have been increasing faster than inflation for decades despite ample competition, and professional sports where competition for players has bid up salaries to the extent that leagues have had to adopt salary controls to preserve their ability to have competitive teams.)
- dsimon
May 27, 2011 at 8:23pm
I re-read what Ryan said, and Chait is absolutely right. Ryan really doesn't respond to any the questions and goes off on tangents with canned talking points. I mean take a look at questions #4, I still can't figure out how he thought he was answering the question asked: 4) You’ve repeatedly compared your Medicare plan to the health-care benefits you receive as a member of Congress. But the system that gives you those benefits, the Federal Employee Health Benefits Program, has not held its cost growth to anywhere near the rate of inflation, or even below that of Medicare. So why will that same model achieve such dramatically different results in Medicare? Medicare is the largest single payer in the American health-care system, so the structure of fee-for-service Medicare is a key driver of health-care costs throughout the system. As my friend and noted health policy expert Jim Capretta likes to say, Medicare is not the train getting pulled by the engine of rising health-care costs. Medicare is the engine driving costs ever-higher, because the way we reimburse providers under Medicare encourages fragmented and costly care. The House Budget Committee recently made a video explaining how this happens. The point is this: The Federal Employee Health Benefits Program cannot claim immunity from the system-wide cost growth that is driven primarily by Medicare. However, if we reform Medicare so that it looks more like the system that members of Congress enjoy — in which federal employees choose from a list of competing plans and get the coverage that delivers the best value to them — then we can slow the growth of Medicare spending and thereby slow the engine that is driving up everyone’s health-care costs." This is ridiculous. RYAN IT IS NOT THE SAME AS THE INSURANCE YOU GET IN CONGRESS!!! Going off on a tangent about Medicare costs that is bullflop anyway is not an answer!
- MikeB.
May 27, 2011 at 8:47pm
Ryan can't answer Klein's second question about what happens if his prognostication about competition and medical care doesn't work, because the basic tenet of his plan is to accept it on faith. The question is liking asking a religious person, "Okay your religion is premised on a belief in God, but what happens to your religion if there is no God?" In other words, if the belief in the competitive market from vouchers is unfounded, the P2P is nothing.
- Nusholtz
May 27, 2011 at 8:53pm
When you are on shaky ground, filibuster the question.
- liberalref
May 27, 2011 at 9:18pm
I cannot understand how anyone can say the medical system remotely resembles a 'free market', anywhere. It's anything but a free market and to say the medical system's costs can be improved via the market is either a liar, a moron or likely both. Entry as a provider (both medical providers and insurance companies) is regulated by the state, a necessary thing. Who wants some quack operating on him or a company that has zero capital to work with shirking on claims? Only governments can enforce rules that have any bite in them. Then you have the system of payment, the most byzantine system you could imagine. "Rack rates" charged by providers bear nearly zero resemblance to what the provider actually collects when negotiated rates are involved. That's just for starters. A patient has zero information on real pricing, little to no information on what services are really needed (unless he is a medical practitioner himself) and nearly an impossible time to get the actual price for services before hand (I've tried in the past; that's another diatribe). Add in that you often need those services when you can least check on them, like after a terrible accident or if you get a serious illness and that compounds your inability to be a "smart consumer". None of us will be shopping for the best deal if you're dying after a serious car crash or if you have a heart attack. I can't check up on what a cancer treatment will cost and plan accordingly like I can when I go out to buy a car, looking for the best deal and taking my time. I want some Democrat, or some serious Republican (if there are any left) to actually throw out these questions to any publican that peddles the lie about "the market" when blathering about reducing medical costs. I'd like to conduct a little experiment first on GOP congresscritters: bump their pay $5000 but make them get their own medical coverage out of pocket in an unregulated market. Have the results monitored relative to the rest of Congress that is under a single-payer system and see what the differences are, like who's happier and who's costs are lower relative to patient outcomes. The results of such a "study" will be fascinating indeed. We've already seen how it works in other countries but heaven forbid Americans actually copy improved systems outside our borders.
- tmmats
May 27, 2011 at 10:19pm
Add to tmmats's examples the free market theory that if you reduce the cost of something, people will consume more of it. The free market fundamentalists argue that unless people have "skin in the game" when they get medical services, they will overuse them leading to waste and higher costs. So if you make colonoscopies free, people will say thanks, I'll take five? There are already plenty of disincentives to see your doctor. Who wants to take half a day sitting around in an office, with a possibly unpleasant procedure to boot? This "moral hazard" concern seems simply unfounded when it comes to health care (or it at least has to be balanced against people who are deterred by cost from seeing their doctor when they should, leading to more expensive treatments down the road), yet free market fundamentalists hold it out as an article of faith.
- dsimon
May 27, 2011 at 10:50pm
The key element of the Ryan plan, that I have not found mentioned anywhere is that it will include an additional 15% load over and above the actual cost of health care. This will happen even if health costs stopped increasing more than core inflation. The reason is because the Ryan plan is simply an insurance purchase plan, not payment for health services. If you pay health insurance premiums, besides your estimated health care costs, those premiums also have to cover costs such as the insurer's overhead, CEO bonuses, sales commissions, and, of course, profit. None of these items are part of Medicare's or Medicaid's (which have around 5% overhead) but they would make up about 15 - 20% of a typical insurer's costs. As a result, the Ryan "cost controls" will not only have to reduce health care inflation, but will have to reduce it substantially more, by an additional 15 - 20% to keep health costs lower than under Medicare. Those must be some cost controls (one of which - paying for performance - he stole from the Affordable Care Act)! The current government insurance programs are adversely selected against, as the portion of the population with the most serious and frequent health problems (the aged, the poor, veterans) are covered by Medicare, Medicaid and the VA. The current private insurance market now competes for the younger and (mostly) healthier segments through individual and group policies. Until recently, they could also refuse to insure those who had very costly or chronic medical conditions. In spite of this, the "magic" of marketplace competition has not resulted in reducing sky-rocketing health care costs or premiums. But somehow this "magic" will work when insurance companies can start covering senior citizens? This argument that people will go out and shop for the best "deal" is a canard - this is health care, not cars! When you are sick or injured, you don't necessarily want to find the cheapest care anywhere. You don't have much choice as to when or how much health care you wish to "consume". And when you do have to consume, you often do not have a choice of providers ("Excuse me, Ms EMT, but could you drive me around to all the local hospitals so I can price shop and determine which would offer the best value for setting my broken leg?"). Ryan also assumes there will be an affordable insurance marketplace for seniors. With the repeal of ACA under the Ryan Plan, there is no regulation of insurance companies so insurers can sell or deny coverage to whoever they want and can charge whatever premium they want. Please note the key word is 'affordable'. Insurance companies can cover anyone - for the right price. It's questionable whether many people would be able to pay that price - even with premium support, when they get to be 70 and 80 years old.
- RobertW
May 28, 2011 at 12:41am
Well as Paul Krugman summed this up: "Oh, and while some people are still trying to praise Ryan for starting a useful conversation, the reality is that he’s totally unwilling to let facts enter the debate. Look at his exchange with Ezra Klein over health care costs: this is not the sound of a sincere, open-minded guy,. Notice how he evades Klein’s attempt to get him to accept the overwhelming fact that other countries pay much less for health care than we do. Sorry, but we are not having a discussion — nor will we, as long as right-wingers like Hubbard and Ryan feel that they can distort the facts with impunity." .
- MikeB.
May 28, 2011 at 9:00am
RobertW: "Ryan also assumes there will be an affordable insurance marketplace for seniors." If the market were capable of providing affordable insurance for seniors, wouldn't it have done so? Ryan seems to forget that these programs weren't formed just to make government "bigger" for its own sake; they were formed to solve what were perceived as serious social problems. Markets generally do good things, but they don't necessarily provide services that we think are important at prices that all people can afford. And that's where some people think government has to step in to fill in those gaps. But it looks like people like Ryan have a hard time overcoming their market-always-good/government-always-bad ideology, and unfortunately there are a lot of people like him in Congress right now.
- dsimon
May 28, 2011 at 9:46am
Regarding another aspect of the Ryan budget scam, why aren't Democrats pointing out that compared to the Obama proposal, the Ryan budget includes -- once one includes the VAT -- tax hikes for the lowest-income 90% of American families. The largest portion of that hike falls on the lower 60% of the income distribution, precisely those who can least afford it, and precisely those whose demand will drive an economic recovery and create jobs. For the love of God, Democrats, stop whining and stop caving and start repeating loud and clear every chance you have that jobs are not created by the rich, jobs are created by a strong and thriving middle class. Repeat after me, Mr. Obama, Mr. Biden, Ms. Pelosi, Mr. Reid, and whoever else has a podium: The rich do not create jobs, the middle class does. Again: The rich do not create jobs, the middle class does. Do you hear me? THE RICH TO NOT CREATE JOBS, THE MIDDLE CLASS DOES.
- krlong014
May 28, 2011 at 9:11pm
Here is another weird bit from Ryan: "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." In Ryan's world it is alright for the state to tax from individuals and then pay for medical care, but it is somehow against the Constitution and democracy for the state to decide not to blow money on wasteful medical proceedures?
- MikeB.
May 29, 2011 at 5:57pm
Ryan: "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." Unless, of course, the small group is employed by an insurance company.
- krlong014
May 29, 2011 at 8:11pm
Paul Ryan has yet to demonstrate he's qualified to judge expertise in others.
- lespin
May 29, 2011 at 10:23pm
Does anyone else see the photo and think that Paul Ryan is putting air quotes around the word "people" in the phrase "poor people"?
- miceelf
May 31, 2011 at 10:40am