The Great Debate

Ryan’s budget frames 2012 election around Medicare

Christopher Papagianis

Mar 23, 2012 12:26 EDT

This week, House Budget Committee Chairman Paul Ryan released what amounts to the most substantive roadmap for fiscal policy that any Republican is likely to offer in 2012. Many political pundits and policy analysts, especially those on the left, are eager to dig into the details to alert the public about the potential (negative) impacts of a budget that slices off $5 trillion in total federal spending compared with the plan offered by President Obama in February.

Providing 100 pages of budget and policy detail in an election year is considered political suicide by many. Democrats fully intend to use the plan to campaign against Republicans in the fall, hoping to gain an advantage not only in select House or Senate races but also in the presidential contest.

Ryan, though, sees this as the only responsible path forward: So what if his plan won’t get enacted into law this year. Should Ryan’s House colleagues, or the candidates for president, avoid taking a detailed position on our country’s fiscal future? As Ryan explains: “If we simply operate based on political fear, nothing is ever going to get done.”

Keith Hennessey provided a great top-line summary of how Ryan’s budget compares with Obama’s:

• Under the Ryan budget, debt would peak at 77.6 percent of the economy in 2014. Under the President’s budget, debt would peak at 80.4 percent of the economy in that same year.
• The Ryan budget would cause debt to steadily decline to 62.3 percent of GDP by the end of the decade. Under the Obama budget, debt would flatten out by 2018 and end the decade at 76.3 percent of GDP, 14 percentage points higher than under the Ryan budget.
• At the end of 10 years, debt would be declining relative to the economy under the Ryan budget, while it would be flat under the president’s budget.

While most of the Republican candidates for president have signaled support for Ryan’s proposal, Governor Romney’s proposals probably track the closest, particularly in the area of Medicare reform. This is a big deal, since it suggests that the presumptive Republican nominee will be advancing an agenda that also echoes the key policy contrast that Ryan is purposely setting up for November.

For Ryan, Congress not only needs to reign in today’s discretionary spending but it also needs to rise to the challenge of making the hard policy choices that will affect the size and shape of tomorrow’s debt and deficit trajectory. And the number one driver of our long-term debt problem is rising healthcare costs.

from Reuters Money:

Deficit cutting need not be cruel

John Wasik

Dec 2, 2010 12:25 EST

Congress needn't be cruel to be kind in cutting the U.S. budget deficit while saving popular programs like Social Security and Medicare.

That's not to say that taxes don't need to rise, deductions pared and giveaways to corporations eliminated. That all needs to be considered, although the recent deficit commission report doesn't do the dirty work in an equitable manner. It places far too much emphasis on paring Social Security benefits, a system that works and won't be in deficit mode for several decades.

There's plenty of pain to go around in the deficit commission's proposal. The most compelling trade-off is based on the idea that lowering personal income-tax rates will achieve some long-term economic stimulus. That thinking hasn't worked in the past and won't work now.

The commission proposal has embraced the wrong incentives based on supply-side philosophy that has never put a dent in unemployment, which only got worse during the Bush tax-cut era.

At first blush, compressing tax rates to three brackets -- 12 percent, 22 percent and 28 percent -- has some immediate appeal. The dreaded alternative minimum tax is eliminated and 150 deductions are pared. To offset the lost revenue from the lower rates, the commission proposes cutting itemized deductions such as mortgage interest and taxing dividends and capital gains at ordinary rates.

Just transforming the mortgage-interest write-off into a 12-percent tax credit only on primary residences (no break on second homes) is a step ahead. Combined with trimming the deduction for employer-provided healthcare would bring more transparency to those huge costs and may even make housing and medical expenses more affordable in the future. A payroll tax holiday is another plum.

The commission stumbles badly, though, in tackling Social Security. It would hike the minimum retirement age to 69 by 2075, figuring that advances in life expectancy will make that feasible. While there are other proposed benefit "bump ups" for those who live a long time or are disabled, the new retirement age looks more like a longevity penalty for people who can't even vote now.

CBO’s score: Cloudy with a chance of bankruptcy

Peter Pitts

Mar 18, 2010 15:51 EDT

–Peter J. Pitts is President of the Center for Medicine in the Public Interest. The views expressed are his own. –

Today, the Congressional Budget Office released its latest estimate of the price tag of the Democrats’ health reform package. At $940 billion, this version of reform will cost more than the measures passed by the House and Senate late last year. More is not always better.

CBO also says the bill will reduce the deficit by $130 billion over the next 10 years and by $1.2 trillion over the following decade. That’s right. It will reduce the deficit by significantly increasing federal spending.  Only in America.

While they’re at it, they should also predict the weather for the next decade.

Let’s face it: Uncle Sam has a poor track record of forecasting how much new programs will cost. Medicare’s progenitors, for example, stated in 1967 that the entitlement would cost $12 billion by 1990. Actual Medicare spending in 1990 amounted to $110 billion — nearly 10 times the initial estimate. Oops.

CBO’s deficit-reduction estimates are further divorced from reality because they don’t include as much as $371 billion in new spending to fix reimbursement rates for doctors who treat Medicare patients. Imagine that — health reform legislation that doesn’t include payments to doctors. Only in Washington, DC.

Absent congressional action, Medicare reimbursement rates will fall 21 percent next year. Congress has no intention of letting that happen. But the Democrats have decided that they don’t have to include this so-called “doctor fix” in their healthcare reform package — even though it’s critical to preserving Medicare.

from Rolfe Winkler:

A healthcare failure could save Obama

Rolfe Winkler

Sep 9, 2009 12:58 EDT

The rising costs of Medicare and Medicaid threaten to destroy the nation's fiscal future, but President Obama is pushing for healthcare reform that would increase costs. Instead, he should refocus his presidency on paying down debt.

America's obligations over the next 75 years now surpass $62 trillion, up 8 percent since last year. And a new report released today by the Peterson Foundation suggests that total will go even higher if the House's health care legislation is passed.

(Click table to enlarge in new window)

With today's pliant bond market, it's easy to pretend we can have things that can't be paid for. But that's the kind of attitude that led California into the fiscal abyss. We have to get serious about bringing our expenses in line with our income. Now.

Unfortunately Republicans and Democrats alike are more concerned with winning elections than passing good public policy. Republicans told us "deficits don't matter," signed a prescription drug benefit for Medicare that created a bigger fiscal hole than Social Security, waged two very expensive wars financed with debt, and borrowed to bail out banks.

For their part, Democrats complain about the deficit they "inherited," then proceed to expand the bailouts, pass hundreds of billions worth of "stimulus," and try to increase our health care liabilities over and above already unsustainable levels.

Partisan economists on both sides provide intellectual cover for this foolishness, but most Americans know better. They know our spending is unsustainable. They see what's happened to California and know intuitively that government can't deliver services it can't pay for. Not forever.

Refuting healthcare myths

– David Magnus, Phd, is the director of the Stanford Center for Biomedical Ethics. The views expressed are his own. –

The public discussion of healthcare reform has been full of so many lies and myths that it is less a policy debate than bad theater.

Critics of reform (conservatives hoping to score political points and oppose Obama on anything; free market ideologues; those with threatened financial interests) have stooped to absurdity in their public pronouncements. One publication declared that severely disabled physicist Stephen Hawking would never get life saving medicine in a national health system, ignoring that Hawking is British—virtually all of his life saving treatments were done through their National Health Service.

As debate over reforming health care continues, these are some of the key myths that get in the way of truly meaningful discussion.

Myth #1—We have the best health care in the world

This is probably true for some Americans. But on the whole our system is among the poorest of all developed nations. We spend far more per capita than any of our peers on healthcare, yet health outcomes measures are no better in aggregate. The World Health Organization ranking of health systems rated 36 other countries as having better health systems despite spending far less. The U.S. was right behind Costa Rica (and only two spots ahead of Cuba).

But the reality of the failure of our health system is best seen by the thousands of people being turned away in Los Angeles last week at the massive free clinic set up by the Remote Area Medical Foundation (see Reuters story). When the country spending the most money can not meet the basic medical needs of so many of its citizens, it does not have a good (or just) health system, much less the best system.

Peddling damaged goods

– Dr. Steffie Woolhandler and Dr. David Himmelstein are both associate professors of medicine at Harvard Medical School and primary care doctors at Cambridge Hospital. They co-founded Physicians for a National Health Program. –

Once they’re finished mandating that we all buy private health insurance, Congress can move on to requiring Americans to purchase other defective products. A Ford Pinto in every garage? Lead-painted toys for every child? Melamine-laced chow for every puppy?

Private health insurance doesn’t work. Even middle class families with supposedly good coverage are just one serious illness away from financial ruin. In a study carried out with colleagues from Harvard Law School and Ohio University we found that medical bills and illness contributed to 62 percent of all personal bankruptcies in 2007 – a 50 percent increase since 2001. Strikingly, three quarters of the medically bankrupt had insurance – at least when they first got sick.

In case after case, the insurance families bought in good faith failed them when they needed it most. Some were bankrupted by co-payments, deductibles, and loopholes that allowed their insurer to deny coverage. Others got too sick to work, leaving them unemployed and uninsured.

Now Congress seems poised to fulfill insurance executives’ prayers; make failure to buy their faulty product a federal offense. We’ve seen this brave new world in Massachusetts. Here, beating your wife, communicating a terrorist threat and being uninsured all carry $1000 fines. Our law has halved the state’s already low uninsurance rate – mostly by expanding Medicaid and similar programs at great public expense.

But reform hasn’t made care affordable for middle class families, or for the public treasury. A middle income uninsured 56 year old is now forced to lay out at least $4,800 for a policy with a $2,000 deductible before it pays for any care, and 20 percent co-payments after that. Skimpy, overpriced coverage like this left one in six Massachusetts residents unable to pay their medical bills last year.

Even among the insured, 18 percent skipped care because they couldn’t afford it. Meanwhile, as costs rise for subsidized coverage our state Senate plans to drop 28,000 people from the insurance rolls, and public hospitals and clinics have suffered draconian cuts as funds were diverted to shore up the reform.