James Pethokoukis

Politics and policy from inside Washington

If Ryan Path is “cruel,” so is Obamacare

Apr 21, 2011 14:29 UTC

Economist Jim Capretta, co-author of the must-read “Why ObamaCare is Wrong for America,” writes the piece I’ve been waiting for him to write about Paul Ryan’s Medicare plan. First, a brief description of the Ryan plan:

It includes a proposal to reform Medicare. Everyone who is 55 and older today will remain in the current Medicare structure. Those below age 55 will get their entitlement in the form of “premium-support credits,” which will be applied to private health plans of their choice on an annual basis. The government will oversee this new Medicare marketplace, organize the information and choices for the beneficiaries, and ensure that all of the plans meet minimum standards.

The program will begin in 2022, at which point the premium-support credits will reflect what the traditional Medicare program costs at that time. In the years after 2022, the premium support credits will be increased commensurate with the rise in consumer inflation, as measured by the consumer price index (CPI).

It is the bit about inflation that Democrats are attacking.

Well, according to the president’s speech — and columns by Alan Blinder, Paul Krugman, and Ezra Klein — it’s the fact that the Medicare “premium-support credits” could be used only for private insurance, and that the credits themselves would be indexed on an annual basis to consumer inflation, not health costs. They argue that, as the years go by, the credits will fall farther behind the actual cost of insurance, and leave seniors with larger and larger premium bills.

But, as Capretta points out, there is a similar system embedded within Obama’s heath reform:

There’s something vaguely familiar about how the Ryan Medicare plan is supposed to work. Inflation-indexed credits. Competing private insurance plans. Government oversight of the marketplace. Oh yeah: That’s the description of Obamacare that advocates have been peddling for months.

Here are the facts. In the new state-based “exchanges” erected by Obamacare, persons with incomes between 133 and 400 percent of the federal poverty line will be eligible for new, federally financed “premium credits” — dare we say “vouchers”? These vouchers can be used only to purchase the private health-insurance plans that are offered in the exchanges. There will be no “public option” to choose from. Initially, the vouchers will be pegged off of the average cost of silver plans in the exchanges, with a limit on the premium owed by the consumer based on their income. In future years, however, growth in the government’s contribution will be limited, first to the rise in average incomes and then the CPI.

That’s right: Obamacare’s new health-entitlement vouchers are indexed to general consumer inflation too. So if Ryan’s Medicare plan is “cruel” and “inhumane” because the credits supposedly fall behind rising costs, then the exact same criticism can be leveled against Obamacare.

Capretta then goes to highlight just how Ryan’s approach will reduce healthcare costs.  Read the the whole thing.


Why does reuters continue to publish this fox wannabe’s comments.

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Study: U.S. budget deficit could average $1.4 trillion a year for a decade

Aug 26, 2009 19:44 UTC

Change a few assumptions and those government budget forecasts start to look scary. The Concord Coalition makes a few tweaks to the Congressional Budget Office model:

1) The Concord Coalition takes the CBO baseline and adjusts it to assume appropriations increase at the same rate as the economy (GDP growth). This increase is closer to the historical average rate of increase.

2) We also assume that supplemental appropriations do not continue indefinitely. For recent appropriations for the wars in Iraq and Afghanistan, we include realistic estimates from CBO about how much will be spent under a scenario where troop levels slowly decrease to about one-third of their level at the time of the estimate.

3) For taxes, we assume that all of the major tax cuts will be extended beyond 2010.

4) We also assume the one-year patches to the Alternative Minimum Tax will continue to be enacted, holding the level of taxpayers hit by the tax roughly constant throughout the baseline period.

5) Finally, we include a calculation for the increased debt service (interest payments) that these policies would cause by their increasing the deficit. We do not make any changes to CBO’s economic assumptions.

And here is what all that looks like as a pretty picture:



Maybe, the deficits could be raised from 1.4 to 14 trillion a decade, so that the Americans sustain their living standards without any need to work. This path is also suggested by the fact that the year 2010 in the graph has been upgraded to 20010. :-)

The strange Republican embrace of Medicare

Aug 24, 2009 15:08 UTC

Chris Edwards over at the Cato Institute is also unsettled by how the GOP is endorsing the status quo with Medicare spending to score political points:

Yet the taxpayer costs of Medicare are expected to more than double over the next decade (from $425 billion in 2009 to $871 billion in 2019), and the program will consume an increasing share of the nation’s economy for decades to come unless there are serious cuts and reforms. Even the Obama administration talks about “bending the cost curve” to slow the program’s growth.

Yet Republican National Committee chairman, Michael Steele, takes to the Washington Post today to defend Medicare against any cuts, while at the same time criticizing the Democrats as “left-wing ideologues:” … Steele uses the mushy statist phrasing “our seniors” repeatedly, as if the government owns this group of people, and that they should have no responsibility for their own lives.

Fiscal conservatives, who have come out in droves to tea party protests and health care meetings this year, are angry at both parties for the government’s massive spending and debt binge in recent years. Mr. Steele has now informed these folks loud and clear that the Republican Party is not interested in restraining government; it is not interested in cutting the program that creates the single biggest threat to taxpayers in coming years. For apparently crass political reasons, Steele defends “our seniors,” but at the expense of massive tax hikes on “our children” if entitlement programs are not cut.

Why Medicare is a beloved fraud

Aug 18, 2009 14:04 UTC

First a few numbers on U.S. healthcare, courtesy of Ed Yardeni:

1) Federal spending on Medicare combined with Federal and State spending on Medicaid over the 12 months ending July totaled a record $923.5bn.

2) Medicare totaled $439.9bn. Federal spending on Medicaid was $241.8bn. To derive the grand total, we doubled this last number to reflect that Medicaid spending is split roughly evenly between the Federal and State government.

3) Personal consumption expenditures on health care services and prescription drugs totaled a record $1,837bn over the 12 months through June, and the government picked up a record 48.6% of the tab.

4) Medicare outlays per senior citizen totaled a record $11,582 during July, up 50% since July 2000. Over this same period, the CPI rose 24.2%, while the CPI for medical care goods and services (covering urban workers) rose 43.9%. The PCED for medical care goods and services (covering all consumers) was up 31.5% from July 2000 through June 2009.

Yardeni’s bottom line:

Proponents of ObamaCare repeatedly ask senior citizens if they are happy with Medicare. Not surprisingly, they love it. It’s free, and places few restrictions on the services and drugs that are covered by the program. Medicaid works the same way for non-senior citizens who are too poor to pay for health care insurance. So why don’t we all get Medicare? Because it is a fraud.

Ask doctors and hospital administrators about Medicare and Medicaid and they will tell you that it amounts to a theft of their services because the government doesn’t pay them enough to cover their expenses for the care they provide. So they pass those costs on to patients covered by private health insurance. This is why medical care prices are rising faster in the CPI–which includes workers’ out-of-pocket expenses, but not the government’s costs of coverage–than in the PCED, which includes both. Then the audacious proponents of more government in health care have the audacity to claim that costs are rising too fast because of waste, inefficiencies, and fraud in the privately-run system!


why do you say Medicare is free? We are charged $90.00 each a month. It’s taken from our social security

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