JONATHAN CHAIT JUNE 29, 2011
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Tom Coburn and Joe Lieberman's bipartisan plan to cut Medicare is one of those notions whose every word ("Coburn," "Lieberman," "bipartisan," etc.) seems designed to provoke liberal antagonism. Talking Points Memo calls it "Ryan Plan 2.0." Joan McCarter and Greg Sargent are attacking it as well. I think they're making a mistake.
First, it's just not accurate to conflate this proposal with Ryancare. Paul Ryan's Medicare plan has two huge problems. First, it privatizes Medicare, fragmenting the system into an inefficient private insurance market. Second, it provides grossly and increasingly inadequate subsidies for insurance within that system. Describing that proposal as "ending Medicare" is contestable but fair.
Coburn and Lieberman's proposal does neither of these things. It may not be perfect, but it's basically a standard package of trimming Medicare while leaving the basic structure in place. Here's Kate Pickert's handy thumbnail description:
* Raise the Medicare eligibility age from 65 to 67, which the senators acknowledge is only feasible because the Affordable Care Act makes it easier for 65 and 66-year-olds to buy private insurance.
* Institute a single Medicare deductible of $550, ask seniors to pay coinsurance for services from 5% to 20%, and set a new annual “out-of-pocket” maximum of $7,500, which will protect seniors from medical bankruptcy. (Higher income seniors will face higher “out-of-pocket” maximums, up to $22,500 for individuals earning $160-$213,000 per year.)
* Limit supplemental insurance coverage so that seniors can’t purchase Medigap policies to cover all of their out of pocket expenses. Studies show this change could reduce over-utilization without harming health.
* Stop paying hospitals for debts incurred, but not paid, by Medicare beneficiaries.
* Increase Medicare Part B premiums for all enrollees, but especially high-income earners. Increase Part D premiums for high-income earners.
* Fix the SGR for three years. This would prevent Congress from having to constantly vote to prevent Medicare reimbursements from falling dramatically.
* Combat Medicaid Medicare fraud. See here for more on this provision.
The irony here is that comparing this to Ryancare plays into Ryan's intellectual sleight of hand. Ryan argues that Medicare as it's currently structured can't continue. The only alternatives are to do nothing and watch it disappear, impose draconian bureaucratic rationing, or try his proposal. The truth is that Medicare is in trouble, and the cost-saving measures in the Affordable Care Act are an important step toward controlling health care cost inflation but probably not enough to solve the problem on their own. Over the very long run we need to build on its cost-control devices. In the medium-run, we probably need to impose some straightforward cost saving. Coburn/Lieberman is a way to do that while preserving the traditional Medicare system. It's proof that Ryan is wrong.
Conflating Ryan's radical plan with standard Medicare cuts is essentially to endorse his argument from the other direction. Ryan paints his proposal as merely a way to bring Medicare's financing into line, while the most ardent critics of Coburn/Lieberman paint a plan to bring Medicare's financing into line as Ryancare. It's not only wrong, it concedes Ryan's argument for him.
Now McCarter and Sargent make a more sophisticated political argument. Democrats have won the Medicare debate and have Republicans on the run over Ryancare, they argue. Why let Republicans off the ropes? Here's Sargent:
Dems have successfully cast the battle over Medicare as one between those who would save the program and those who would destroy it — or at least transform it so fundamentally that it would cease to exist.
As this ad shows, the GOP’s response is to muddy the waters by claiming that both sides agree Medicare needs to be cut and that the only difference is over the details — indeed, the GOP is now claiming that the Dem plan is more extreme than the Ryan plan. Cutting Medicare is now “extreme”; Dems have already proven themselves willing to take that step; Republicans won’t let Dems get away with it.
The question now is whether Dems will take this sort of thing as a sign that they maintain an advantage on Medicare that would be badly undermined if they agree to any significant Medicare benefits cuts. If they do, it will only give Republicans more grist to keep attacking them from the left in exactly this fashion, and muddle the contrast between the parties on a popular entitlement program that has been a pillar of the Democratic Party’s identity for decades.
I don't really understand this. As Sargent notes, Republicans are already attacking Democrats for cutting Medicare. The waters have been muddied, and Democrats are winning anyway. They're winning because there's a fundamental divide between trimming Medicare and ending Medicare. That will continue to exist even if both parties agree to Coburn/Lieberman.
Now, it's true that a bipartisan deal on Medicare will help Republicans present the Ryan plan as just a conversation starter they don't really want to, you know, happen. But everybody still knows this is what Republicans would like to pass if they actually had the power to do so, and Democrats should be able to make this case to the voters. Meanwhile, the deficit is an actual problem, and Democrats need to find politically feasible ways to help solve it. There are bright lines to draw: slashing the already-lean Medicaid program, starving the long-starved domestic discretionary budget, and failing to require any sacrifice from the affluent. "No cuts to Social Security and Medicare" is the wrong place to draw the line.
28 comments
I disagree. "Muddying the waters" is the LAST thing we want to do at this point. Proposing yet another compromise proposal the Republicans will seem to support, then pull out of at the last minute, is simply inept. The Republicans are currently stone-walling on ACA, STILL calling it Obamacare and threatening repeal, just as soon as they collect enough seats and power to do so. Why try to 'tweak' the ACA with these additional modifications NOW? Right now the choice is clear, between RyanCare's privatization, and Obamacare's new rules and cost controls, some of which don't even kick in till 2014. Yet another dead-on-arrival option, especially NOW, will only serve the Republican obfuscation machine.
- AllanL5
June 29, 2011 at 11:41am
Everything in this plan that involves some form of means-testing should be encouraged. It is a tax increase. Good. In the absence of a system of progressive taxation that puts the burden for Medicare where it belongs, it is the best that can be done. Anything that reduces coverage, including raising the age of participation, should be resisted. This is cost-shifting that is not based on means but simply on eliminating program benefits. Those who can afford it will then get coverage, the rest won't. Or, the ACA insurance rules will simply shift the costs into private insurance without actually achieving anything substantive. The core problem is medical costs, not medical financing which is easily fixed in any number of ways if we had the political will. Reducing the public cost to postpone the day of reckoning on solid cost control only makes matters worse. Bring the day of reckoning sooner. The sky won't fall if we run deficits to pay for Medicare, until the day when the sky will fall. Then we will finally do something to address the runaway cost of medical care in this country. Finally, you fail to address the point made by Krugman, that public care is less costly than private so that eliminating Medicare for ages 65-67 will only increase the cost for the economy as a whole while enabling this to occur because the most visible public portion is somewhat mitigated. I say, accept all the means-testing and throw away the rest. That's as much chance as Lieberman and Coburn deserve.
- roidubouloi
June 29, 2011 at 11:51am
The Democrats aren’t saying no cuts to Medicare. They already cut $500 billion in the ACA, and the ACA’s long run cost saving measures, which weren’t counted in this $500 billion, could end up cutting far more. But did you miss the Krugman posts on raising the Medicare age? See: http://krugman.blogs.nytimes.com/2011/06/12/its-the-health-care-costs-stupid/ Medicare is a lot cheaper than private insurance, so how do Americans really save money by shifting people age 65-67 to private insurance? By them not getting health care? Healthcare has to be paid for one way or another, either an insurance or hospital bill, or a tax bill which is cheaper. Either way, if medical inflation does not come down, eventually neither one will be affordable. You have to attack medical inflation, and that’s a lot easier to do with single payer Medicare. Jonathan, you have to read the Krugman posts on this or you’re going to be seriously ill informed.
- RHSerlin
June 29, 2011 at 12:22pm
Fine comment, roid. I don't agree with it entirely but it is eloquent, empirical, and well-argued. Bravo.
- liberalref
June 29, 2011 at 12:24pm
Thank you, lib.
- roidubouloi
June 29, 2011 at 12:36pm
Three comments. First, with respect to a bipartisan "deal", there is a small but growing ethnic group in the US that has the reputation for driving a hard bargain in business (no, it's not us/them). My experience is that there never is a "deal", that what others understood to be a "deal" is just another negotiation. I would say this ethnic group and Republicans are indistinguishable. Second, the Democrats struggle to maintain support from the middle class because the Democrats are often perceived as representing "special" interests. And that middle class has made it very clear that they are opposed to means-testing; indeed, Chait has written about the supposed racism that is implied by the opposition. Third, studies have shown there would be no savings from increasing eligibility to 67 from 65 because seniors simply wait until their are eligible to get medical care, care that may actually be much more expensive because they waited. I think Chait may have gotten into the July 4th libations a little early.
- rayward
June 29, 2011 at 1:01pm
Also, if your total income is $12,000 or less and you're supposed to pay $7,500 for medical costs, how does this work? Means testing is fair, the other stuff, not. Including raising the age when Medicare kicks in. I think actually it should be lowered to 62. But then I think everybody should be on Medicare and EVERYBODY should pay into Social Security - up to all levels of income and all professions; if they want private pensions on top of that; fine.
- Sophia
June 29, 2011 at 2:08pm
And raising the Medicare age starts a very dangerous precedent, way of thinking. What we want, which would be extremely beneficial, is to do the opposite, to lower the Medicare age, to move us towards Medicare for all. You raise it and you’ve really dashed the odds of that. You know how hard it is for people even in their lower 60’s to get private health insurance, let alone in their upper 60’s? You know how hard it is even for people in their 50’s? What we should be doing is trying, when Democrats have control (and hopefully finally abolish the filibuster), to move it to 55, and then 50, and then for all children and college students, and then for all. But you start a precedent in peoples’ minds of raising it and you’ve really hurt that possibility. And don’t think, oh, the ACA will make it a lot easier for people in their late 60’s to get health insurance. The ACA easily might not survive five Republican Supreme Court Justices, or the 2012 elections. Republicans only need the Presidency and a majority in the Senate. The filibuster only stops the Democrats from getting what they really want. Republicans will change the rules of reconciliation to allow them to repeal, or fire the parliamentarian and hire one who will agree with them, as they’ve done before.
- RHSerlin
June 29, 2011 at 2:21pm
As one might expect, Chait's David Broder impersonation is getting rave reviews around the blogosphere. Sigh.
- rayward
June 29, 2011 at 3:16pm
I think Roid is right. Proper cost controls are needed. However, I do agree with Chait in that this is not what Ryan's plan is.
- MikeB.
June 29, 2011 at 3:46pm
I think people are missing the point, the ACA will step in and prevent cost shifting onto poor seniors by way of subsidies, and while I agree that raising the age limit will likely raise total costs to our society I am not sure how much given that we do not know how much the ACA will produce in cost savings. The important thing is that raising the age limit will be a form of means testing and cost shifting, but cost shifting is not so bad. I know many seniors who are living very well and get far better health care than many working people who get nothing, yet are the ones contributing to our society. So think of it as a tax increase for seniors aged 65 to 67 for seniors who can afford it. Beyond this, the retirement age is 68 for people born after 1962, many of these workers will be covered in insurance pools tied in with younger people. I don't forsee insurance companies benefitting that much by having to cover this age group. RHSerlin, if what you say is true, then stopping it now would only delay the inevitable of something far worse, take what you can get now to take it off the table as an issue.
- blackton
June 29, 2011 at 6:26pm
You seem to be suggesting, blackton, that coverage for people age 65-67 somehow materializes for free. Who is going to pay for it? There are a lot of people who actually live on their social security. Who is going to pay for them? Or is this nothing more than a de facto increase in the retirement age for those who cannot afford to retire without medical coverage? It is a tax increase for seniors aged 65 to 67, but it is no sense limited to those who can afford it. I just checked and the full-retirement age for those born 1960 or later is 67. So, what you want to say is that that should be the effective retirement age, no? Whoever set we should want to keep lowering the age for Medicare coverage had it right. We should all have Medicare coverage. Rowing backwards is not the way to get there.
- roidubouloi
June 29, 2011 at 6:46pm
Besides, one ought to feel a visceral repugnance for anything proposed by Lieberman. I do. I know it cannot be good for the country.
- roidubouloi
June 29, 2011 at 6:47pm
Roid, nice comments but you drop the ball by not reminding everyone that cost shifting not only includes shifting more costs to seniors, but often their children (given that they had them) who themselves may be trying to raise a family or run a business, meaning that said cost shifting can seriously curtail other economic activity. You made that argument a while back in that long wonky post regarding the Dallas Fed paper. It still needs to be said over and over, till it sticks.
- jet
June 30, 2011 at 12:04am
"Everything in this plan that involves some form of means-testing should be encouraged. It is a tax increase. Good. In the absence of a system of progressive taxation that puts the burden for Medicare where it belongs, it is the best that can be done. Anything that reduces coverage, including raising the age of participation, should be resisted. This is cost-shifting that is not based on means but simply on eliminating program benefits." Well put, I agree. Reducing benefits is not reform, it a step toward eradication. It says that these programs are based on "affordability" defined politically and not on medical necessity.
- arnon
June 30, 2011 at 9:06am
I drop the ball all the time, jet. Thanks for filling in the gap.
- roidubouloi
June 30, 2011 at 10:25am
arnon writes: "Reducing benefits is not reform, it a step toward eradication. It says that these programs are based on "affordability" defined politically and not on medical necessity." No, it means these programs must be based on reality. A person receives 3X in benefits what they pay in. Medicare, like all Ponzi schemes, will eventually collapse unless the ratio of workers to recipients is continually adjusted. The vernacular here is "ratio full time equivalent workers to Medicare beneficiaries." By 2030, each worker will have to support almost 2X more retirees than are being supported today. Of course, in these terms it's easy for everyone to understand what is happening. Today, each worker pays 2.9% in medicare taxes. Roughly,, then, we can keep Medicare working as is if everyone would pay almost 2X more. Or, 6%. think about that: Pay a lifetime of 6% payroll taxes to have "free" healthcare after the age of 65. But if folks aren't willing to do that, then you can change either the number of people in Medicare OR you can change the benefits received. Or both. You guys are like the rioters in Greece. You are pissed we are out of money. You are pissed the suckers in Germany won't keep working to keep in tact the lifestyle you believe you deserve. In both cases, it's hysterical to watch the look on closet (and open) socialists' faces when the money runs out.
- seattleeng
June 30, 2011 at 10:47am
You're missing the point, Seattle. The larger problem is the cost of healthcare to society, not the Federal government. Reducing medicare benefits just cost-shifts onto the consumer, while making the problem even worse, because private insurance costs more. As for the rest, I don't mind paying higher taxes to support medicare, as long as some effort is made to reduce cost-inflation. However, a payroll tax isn't the way to go. Try a VAT.
- Curran1
June 30, 2011 at 11:35am
But the cost of health care to society is what it is. If you think government monkeying will significantly change the cost in a sustainable fashion, you are wrong. If you think the current level of care can be delivered at a substantially reduced cost, you are wrong. The cost is what it is. If you doubt this, then list your three biggest boogeymen (insurers, drugs and doctor salaries, I'll bet) and I'll refer you to the McKinsey report and we can back those figures out and see not much has changed. We're still super expensive. Now, we spend 30% of medicare on the last year of life. The Dutch? 10%. Cruel and heartless? You tell me. But that is where EU healthcare will take us (and yes, Palin was right). And honestly, it's where we need to go. And yes, the Dutch (and Brits, and most of Europe) manage this cost via Death Panels, aka QALY or similar.
- seattleeng
June 30, 2011 at 12:01pm
This is one of those times when I wonder why I subscribe to the TNR. Whatever happened to the Fighting Faith of liberalism? Give here and give there. That's what Walker is doing on a grander scale to us here in Wisconsin.
- hkaye
June 30, 2011 at 12:16pm
Seattleeng “No, it means these programs must be based on reality.” And by “reality” you mean? “A person receives 3X in benefits what they pay in. Medicare, like all Ponzi schemes, will eventually collapse unless the ratio of workers to recipients is continually adjusted.” Medical care is a social not an individual responsibility and should be paid by all of us. No person, unless they won life's megabucks lottery will be able to cover his costs in say cancer treatment. According to you, “reality” dictates that if a person can’t afford a heart transplant he should just take his chances with the malfunctioning heart in his chest. Anyone who talks about Ponzi schemes in relation to medicine is saying that medical treatment should only be available to the wealthy and healthy.
- arnon
June 30, 2011 at 12:48pm
"Besides, one ought to feel a visceral repugnance for anything proposed by Lieberman. I do. I know it cannot be good for the country." This pretty crude, but given the poster not unexpected.
- arnon
June 30, 2011 at 12:49pm
I don't quite understand how "new annual “out-of-pocket” maximum of $7,500, which will protect seniors from medical bankruptcy" works exactly. I mean, I understand how an out-of-pocket maximum works, but how exactly does that protect seniors from medical bankruptcy. Some seniors would be bankrupt in a heartbeat if they suddenly encountered an annual $7,500 decrease in their cash flow. A person that has worked their entire life close to the poverty line and has no retirement reserve and is depending in great part on Social Security benefits that don't even match the "minimum wage" to supplement their income couldn't possibly afford medical care based on this proposal.
- waroberts
June 30, 2011 at 6:32pm
arnon writes: "Medical care is a social not an individual responsibility and should be paid by all of us. No person, unless they won life's megabucks lottery will be able to cover his costs in say cancer treatment." That's what insurance is for. A high deductible insurance plan costs about as much as a family cell phone plan + cable. You are aware that the EU middle class is paying about $15K more than their US counterparts in taxes. that's right: the working poor in the EU pay a freaking crapload in taxes. those in the US do not. Do you see where the "free" health care comes from? Question: Assume I am right, and that offering all our citizens "free" healthcare will require taxes on our working poor to rise substantially (similar to EU, if they earn $40,000/year, then $15K of that will be due in taxes...today, they are paying zero income tax). Are you still for this "free" healthcare?
- seattleeng
June 30, 2011 at 6:54pm
Seattleeng “That's what insurance is for. A high deductible insurance plan costs about as much as a family cell phone plan + cable.” I can choose not to have cable, but I can’t chose to go through life without some medical attention. Hence the comparison is empty. In any case, in Mass everyone has to get medical insurance of some kind till you are of age to be covered by Medicare. Your comment Seattleeng confuses general health insurance with medical insurance dealing with the elderly: this is what Medicare is. The European example, btw, is not relevant to the US even if your figures were accurate.
- arnon
June 30, 2011 at 7:29pm
arnon writes: "I can choose not to have cable, but I can’t chose to go through life without some medical attention. Hence the comparison is empty" Actually, up until recently, much of the country DID go through life without professional medical attention. There weren't antibiotics. Births were performed by family or midwifes. Broken arms and stitches were administered at home. This belief that we are not GUARANTEED all this by the government is laughable. Especially when you consider food, water and housing are more of a requirement than treatment for prostrate cancer. And you'd look like a fool to try and argue that food, water and housing are a right. arnon writes: "The European example, btw, is not relevant to the US even if your figures were accurate." Of course it is. If you guys want EU style of care, then you must expect crushing EU style of taxes on the working poor. There is no other way around this. And our taxes will be almost twice as crushing as the EU taxes. Why? Because medical care in the US is inherently more expensive. Not just doctor salaries, drug company and insurere profits. Take those out and we're still considerably more expensive. Now, I'll ask the question again since you avoided it. If "free" health care requires crushing taxes on our working poor, do you still want it? PS. The Mass program is busted. "Broke" in the words of Howard Dean. You guys keep talking about the benefits without considering the cost. And you will never make things work until you do. That is why single payer is a fairy tale. It works ONLY if you tax the living crap out of the working poor (and everyone else) And, ironically, medical bankruptcies are UP--way up--in Massachusetts. Go figure.
- seattleeng
July 1, 2011 at 11:57am
More nonsense from seattle. Our income distribution is far more skewed to the wealthy than in Europe. Hence, we have lots of upper-end income we can tax long before we impose heavy taxes on the working poor. And if we used a single payer system to force our medical costs, now 17.5% of GDP in contrast to 11% for the French, we could afford medical care for everyone with the existing stream of insurance premiums. No one's taxes would have to go up. Not a penny.
- roidubouloi
July 2, 2011 at 9:22am
And all this nonsense about crushing taxes. Europeans are not crushed. The lower and middle classes enjoy a better life than they do here. What matters is after-tax income distribution and the stream of government benefits such as health-care, education, and pension that are on top of after-tax income. The rhetorical focus on taxes is, frankly, idiotic. What matters is the final economic outcome, not whether it is achieved with a particular set of tax rates. This is simply the rhetorical aspect of the right-wing demand for maximum inequality. They direct our attention at taxes, because no one likes to pay taxes, rather than at the hugely skewed system of income inequality that is their desired object. All just rhetorical bait and switch.
- roidubouloi
July 2, 2011 at 9:26am