James Pethokoukis

Politics and policy from inside Washington

Does Bowles-Simpson kill Obamacare or enshrine it?

November 11, 2010

On this there seems to be some differing of opinion. From the liberal side, Brad DeLong:

The second [worst thing about the plan]  is the capping of federal health spending growth at GDP+1%/year. That means that, adjusting the aging of the population, the government is supposed to spend a smaller share of incomes on health care as each year passes. That would require not just the repeal of the Affordable Care Act but the elimination of Medicare as we know it.

And from the  conservative side, James Capretta:

But the most important entitlement decision in the entire package is the explicit endorsement of Obamacare. The Bowles-Simpson proposal would leave in place the entire trillion-dollar monstrosity. Indeed, many of its supposed cost-cutting recommendations would build on Obamacare’s flawed structure of government-driven cost-cutting through price controls. In particular, they would like to create what amounts to a global budget on health care, with the Independent Payment Advisory Board (IPAB) given the unilateral authority to hit budget targets with price cutting. This is exactly the opposite of what’s needed, which is cost discipline through consumer choice in a functioning marketplace.

Meanwhile, Bowles and Simpson refused to endorse moving Medicare toward a defined contribution program, as Rep. Paul Ryan’s Roadmap proposes, relying instead on the usual laundry list of cuts to the existing program structure.

I think the right answer here is that the B-S plan keeps the structure of Obamacare but essentially defunds it as envisioned.  U.S healthcare will either move toward more government-mandated rationing or voucherization. Bowles-Simpson throw its lot in with the former by giving the Independent Payment Advisory Board even more power to cut, cut, cut.

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