The Medicare Morass
It’s too soon to render a definitive judgment, but I’ve got to hand it to Romney-Ryan: So far, they’ve done a really good job confusing the Medicare issue.
Once it was announced that the GOP ticket would feature the maestro behind Congressional Republican votes to end Medicare As We Know It, the next three-to-however-many-until-November-6 days were fated to be about the perhaps second-most popular entitlement in the country, and which Party was going to save/kill it. While recent polling may indicate that American voters’ old habits die hard, the reports I’ve seen thus far from the campaign are leading me to believe that Republicans may be able to shield themselves from the worst of the pro-Medicare blowback by talking incessantly of Obamacare’s $700+ billion Medicare cuts.
As is the case for Obama-Biden with white, non-college educated voters, Romney-Ryan need only mitigate their losses among the Medicare bloc to “win” the round.
Now, I must repeat: It’s way too early to authoritatively say that Republicans have indeed “won.” Paul Ryan is a household name for political pros and observers, but most Americans still don’t know who he is, and voters tend to initially give newbies the benefit of the doubt. My sense is that the facts of the matter — i.e., the public’s consistent, vehement opposition to a serious overhaul of Medicare — are simply too unfriendly to the GOP, and that Democrats will reap predictable gains after weeks-and-weeks of hearing anti-Ryan talking points. But much as I wished as a child, I never did develop “spider-sense,” so my instincts on this one could well be wrong.
If it turns out I am wrong, I’ll probably chalk it up to an often unacknowledged reality of Medicare politics: This stuff is confusing! Even Ed Kilgore, a guy who has spent decades immersed in health care policy and previously worked for the DLC, admits that he sometimes loses himself in all of the program’s arcana. If the folks whose livelihoods and careers depend on understanding Medicare reform are struggling, you can bet that most voters will feel as if they’re bumbling through a thicket on a moonless night. What makes pundits any better? Not much; they’re just paid to convince you otherwise.
Here’s an example of the Medicare thicket in action — a New Republic piece from Harvard economist David Cutler in which he exhorts Republican pundits to stop citing his work in defense of the claim that market competition will be cheaper for Medicare beneficiaries than the current system. Cutler goes into fine, if not granular, detail on what, exactly, his research has found; and how, exactly, it’s not what James Capretta and Yuval Levin report in The Weekly Standard. Then he cuts to the chase:
To put it a bit more plainly, it’s possible that the private plans are cheaper because they really do offer the same benefits at a lower cost. It’s also possible that the private plans are cheaper because the insurers are very good at attracting the best risks—that is, the healthiest seniors least likely to run up medical bills—or because they don’t also subsidize other parts of our health care system, such as medical education. In effect, they may be gaming the system. At this point, we really don’t know which answer is correct, although it’s entirely possible all three are true, to an extent.
To appropriate the late Christopher Wallace: If you don’t know, well… you still don’t really know.
In my eyes, this episode (of which, between now and November, there will be countless repeats) offers a great illustration of why Conor P. Williams is right to spend so much time urging the Left to change its rhetoric by foregoing wonky policy minutiae in favor of a clear, direct, and unapologetically moralistic appeal. Debating whether or not Obama’s cuts to Medicare are worse, better, or the same as Paul Ryan’s cuts to Medicare — that’s not only a waste of the Democrats’ time, but also a failed opportunity to underline, with a real-world example, the divergent philosophies between Dems and the GOP.
That’s not only good for Democrats; it’s good for voters, too. It’s no fun to feel in over your head, and it’s something far worse than “no fun” to feel that way while your future is, potentially, on the chopping block.
[x-posted]
The Democrats tried to make the Moral Appeal. We got laffed at, told we were stupid, that Ted Kennedy was dead and with him, the old welfare model. Conor’s so far off base I wonder at turns if he’s even playing in the same ballpark.
Medicare needs fixing. Why should Democrats bother to defend it in its present incarnation? Ask any physician, ask him about how long his Medicare receivables have gotten. With any other receivable, UCC lets your accountant and CFO turn them into a secured lending transaction, but not Medicare/Medicaid. The various states have so badly goobered up these programs, anyone trying to make sense of this situation is faced with the proposition of Shit or Go Blind.
What moral appeal should we make? How about appealing to people’s self-interest. I’ve got a dandy appeal, should go over nicely with Conservatives. It’s called Single Payer. Solves a million problems all at once, just like the Federal Reserve clearing checks.Report
I’ve got a dandy appeal, should go over nicely with Conservatives. It’s called Single Payer. Solves a million problems all at once,…
The only problem is that it puts millions of clerks, both on the health care provider side as well as the insurance side, out of work. I’m not sure which would be worse from that perspective, single payer or tax code simplification.Report
Debating whether or not Obama’s cuts to Medicare are worse, better, or the same as Paul Ryan’s cuts to Medicare
I don’t know if you meant this intentionally or you unconsciously adopted the GOP framing of it, but it sorta makes your point either way. What do we mean by “cuts to Medicare”? Obama’s plan reduces the costs of medicare without reducing services over the timeline, which results in savings, which reduces spending. Is a spending reduction due to savings a “spending cut”? Well …
So, yes, it’s a politically messy issue. I’m not sure that means Dems should all abandon the wonky details because of that.Report
“Obama’s plan reduces the costs of medicare without reducing services over the timeline”
Separate from the current political debate, I still don’t get how it’s able to do that. That is, I don’t understand what’s the tradeoff – what’s the catch?. Because if we can reduce Medicare costs without reducing services, well, why aren’t we doing that now?Report
I think the argument is that ACA will shift a segment of people out of Medicare into health care plans (by subsidizing the purchase price). I’m skeptical, and to some extent it’s just shifting the money to another budget line, but technically it could save money on the Medicare budget line without reducing services to those who remain on Medicare.Report
If you go back to the replay, those “cuts” grew considerably after the CBO scored the initial bill as a budget buster. Now, to be fair, Obama et al did not think the CBO scoring was fair, mainly because the CBO refused to assume that getting all these uninsured people insured would reduce outlays under Medicare and Medicaid and the like. So the bill was changed to add “cuts” in the back years, with some being specific like cutting Medicare Advantage, but mostly it is just assertions that future Congresses will spend less to buy the same benefits, ie squeeze health care margins.
The CBO is not partisan but the whole budgeting process is broken; it is especially disappointing that both parties accept that 10yr CBO forecasts based on current law are the gold-standard on which to debate fiscal costs. One of the most scurrilous arguments against repeal of PPACA is that doing so would increase the deficit – that is hokum as many have argued, eg http://online.wsj.com/article/SB10001424052748703954004576089702354292100.htmlReport
My understanding is that the primary mechanism is to get the savings from Medicare Advantage, where we’re basically paying rents to private middlemen in a failed attempt to use competition to reduce costs. In theory at least, medicare recipients in Medicare Advantage aren’t actually getting any better coverage than traditional medicare, but they are more expensive for the Feds. Get them in traditional Medicare and you save money without cutting services.Report
Don – I think that is context 20% of the “cuts” … I’m not trying to be partisan, but I think the honest answer is that the cuts are mostly budget gimmicks, in particular asserting that future Congresses will pay less for the same services … like magic. They did this because they think that the 10yr horizon is ridiculous, the bill saves trillions in the long-run, that it’s a really good idea anyhow to cover everyone (but not until 2014 also due to budget concerns), and that they were being way more responsible than when Republicans passed the prescription drug benefit or fought unfunded and undeclared wars off-budget. But it was not a high moment for Obama on honest budgeting (where I would give him credit for the first year and then he realized that honest budgeting doesn’t sell).Report
That’s inconsistent with the impression that I have from my reading, but honestly the details of the medicare cuts are above my pay grade. Do you have a link for me to look over?Report
Here’s a link that I think is trying to support PPACA and explaining why the cuts are really administrative / reimbursement cuts, ie not benefit cuts: http://www.medicareadvocacy.org/2010/10/28/health-care-reform-does-not-cut-medicare-benefits/
I read it as saying in a nice-spin what I said above, which is that the cuts are basically legislated cuts to providers who are expected to provide the same services for less. At least when they did the debt-ceiling deal the super-committee fallback was across the board cuts; here there is no fallback for when Congress doesn’t cut doctor pay or more people end up qualifying for the various subsidies.
A good summary of the issues is here: http://opinionator.blogs.nytimes.com/2010/03/19/checking-the-math-on-health-care/
I read this as a litany of problems but no answers. I’m more interested in the truth than defending either party; in this case, I think the administration needed to get this scored, believed in it, and held-their-nose at the gimmicks involved.Report
This is probably excellent, considering the source!
http://www.cato.org/pubs/wtpapers/BadMedicineWP.pdfReport
Based upon the Pew article the only political advantage in this relies on which party can be cast as the one most likely to cut benefits.Report
“…talking incessantly of Obamacare’s $700+ billion Medicare cuts.” !!! Will FWD to HQ ASAP.
And save it for future generations!
http://www.cnbc.com/id/48712407/Ryan_Wants_to_Save_Medicare_for_Mom_Grandma
“[T]the biggest threat to Medicare as we know it is Medicare as we know it. “—new rightosphere truismReport
It’s almost like you try to miss the point.
No, that’s wrong. It’s exactly like you try to miss the point.Report
Don’t hit that?Report
Dang. I’m gonna get kicked outa the gang, aren’t I?Report
You have to go through the formal initiation into the gang before we can kick you out of it.Report
So, yeah…
It would be awesome if we didn’t escalate this to the point of shutting down anything.Report
Fox News had a headline that said “Ryan plans to save Medicare $715B; Obama plans to cut Medicare $760B” (the numbers might have been slightly different, but they were both in the $700B range and Ryan’s was slightly less). When one guy does it, he’s saving money. When another guy does it, he’s cutting spending. Usually they have some commercial break between such blatant examples of language manipulation… but this one they put right there on the screen for everyone to see.Report
A serious question: when Democrats complain, reasonably, that the Ryan voucher plan “ends Medicare as we know it” do they actually think that it is a good idea to keep Medicare as an open-ended entitlement as it is now? I mean, I can understand how someone thinks it would be nice to give away such benefits, but do serious Democrats think that it is economically feasible to support such a program?Report
Yes, but with a big asterisk. The thing is that under current medical cost growth rates, health care in general isn’t affordable. So the thinking goes that if we can bend the curve, then we can afford Medicare. And if we can’t, then we’re screwed in general. Since the latter scenario is unpleasant to think about, much less sell to voters, we focus on the former. Therefore we work on both bending the curve and expanded coverage (which I would argue are complementary goals).Report
That seems descriptive of how some Democrats think, but there are plenty of Democrats who understand economics – to them, doesn’t the notion that the govt is going to subsidize demand and constrain supply run at odds with “bending the cost curve down”?
We have subsidized and now mandated that health care be purchased via prior purchases of insurance, which really increases demand (especially when the provider decides what you need to buy and the consumer bears at most a small part of the marginal costs). And the biggest issue is that the govt constrains supply by regulating the industry and requiring licensure. Now aside from some conservatives and most libertarians, the country wants nothing to do with free-market heath care. I get that. But why do economically literate Democrats think that “expanded coverage” and “bending the cost curve” are not completely contrary policy options?Report
To build on this… that particular line is cheap, crappy, but probably effective rhetoric. As a policy, the Democrat’s position seems to be to fix Medicare and not end it. Of course, even here we are playing with words… Would Ryan’s plan still be considered “Medicare” or would it have a new name? If it had a new name but was effective in delivering insurance to seniors, wouldn’t that fix the problem, which is really more important than fixing the program? I support fixing Medicare; I support the government helping seniors to secure insurance, at least so long as it incentivizes the coupling of health insurance with employment. If Ryan’s plan does that, I support it. Frankly, I haven’t seen much one way or the other, though I haven’t looked particularly hard, not at this point. In general, I am a bit skeptical whenever Republicans trot out vouchers as a solution in and of themselves.Report
Vouchers are the way to ration healthcare while respecting consumers, ie the somewhat-more-free-market way to subsidize something. We are going to spend less on end-of-life care for normal (ie not rich) people. That is going to happen no matter what. The choice is whether that happens under a set of medical experts deciding what the cost-benefit analysis suggests is worthwhile to do as opposed to a system where the govt chips in some fixed money and then it’s up to old-people-consumers to decide what they want to buy. I’m strongly in favor of vouchers over healthcare panels, because I like putting the power at the individual level independent of how large a subsidy we want to legislate. Most Democrats don’t like that, or as Republicans would say, they cannot stand letting individuals decide what is best for themselves.Report
I am not opposed to vouchers in the abstract. Just most plans that I’ve seen put forth by Republicans for vouchers (which were universally in relation to education, which is a different animal than health care) didn’t really seem interested in actually addressing the problem. I’m happy to judge the Ryan plan independent of that and on its own merits when I have the time to look it over thoroughly (read: when someone else here writes up a great post on it that I can skim); just as word association, “Republican” and “voucher” make me think “Uh oh.”
Big picture, I believe in decoupling insurance from employment and then either having a robust public option or single payer supplemented by private options (maybe that’s not single payer… I get lost sometimes…). So lots of what is being bandied about is far from what I’d most prefer.
And, for the record, I am not a Democrat, formally or informally. I am certainly liberal, with some strong libertarian leanings and a dash or two of fiscal conservatism (though that is likely more a function of the libertarian leanings than any particular affection for conservatism). Socially, I run largely with Democratic crowds and did/likely will vote for Obama.Report
Argh… to clarify… “Socially, I run largely with Democratic crowds” means that in my personal life, most of my friends are Democrats; there are many social policy issues that I think the Democrats fudge up royally, even if I agree with their broader views.Report
BobbyC –
The Medicare discussion gets really messy when you don’t differentiate between healthcare and health insurance. The vouchers in Ryan’s proposal are for a fixed amount to purchase private insurance. So, in either plan, the rationing will be directed by a set of experts deciding what health care is going to be covered and what isn’t. So it comes down to corporate insurance bureaucrats versus government bureaucrats – pick your poison.
The most pertinent argument I’ve seen from liberals against a fixed money voucher for Medicare is an economic, market informed one – the elderly as a group are a terrible market for insurers – great risk for pay-out with little opportunity to collect premiums. So, it’s not that Democrats “cannot stand letting individuals decide what is best for themselves”, but rather great skepticism that elderly consumers will have any meaningful choice at all.Report
I think that’s right. I recently read Scalia criticizing the ACA because it forced young people to subsidize premiums for the elderly. That may be true, but the problem is, it’s the nature of the insurance beast. There’s just no getting around it, even in the private sector. The young and healthy need to subsidize the price of insurance for the old and potentially very unhealthy. In an different world, one where people held the same policy over the course of their entire lifetime and healthcare costs were stable and predictable so that profitable premium price for that individualcould be reliably determined, the “subsidy” could be paid by the same individual over time. But we don’t.Report
That is not the nature of insurance. The nature of insurance is that each policyholder pays 100 and expects to get ON AVERAGE 95, but does it because they get zero 90% of the time and 950 10% of the time. That’s the nature of insurance, not one class of people paying 100 to get 30 on average, so that another group can pay 100 to get 140 on average. That sir is the nature of govt mandated insurance with minimum coverage, which is bastardized insurance. Scalia is right here.Report
No, Scalia is wrong. If old people aren’t going to be priced out of the market, they need young people to subsidize their premiums. The young people could be different people at a contemporaneous time slice, or it could be the very same person over a sequence of time slices.Report
Scalia’s looking at it incorrectly.
It’s now mandatory insurance. You’re gonna have it ’till you die. From an actuarial standpoint, you ain’t “you, right now, this moment”.
You’re “you, the entity that on average will live to be 72.2 years old, and generate over your lifetime X dollars in healthcare costs… the net present value of which is Y dollars, which… with percentage return over the next 72.2 – your current age in years is FOO dollars a month.”
You’re not “subsidizing old people”. You’re not even properly subsidizing your old age, now. You’re paying the vigorish on the average health care costs for someone who is going to live to be the average life expectancy.
If you croak before you’re 50, you lost. If you croak after you’re 95 and the cap on lifetime expenditures on a laundry list of medical expenses incurred after 72.2, you won.
But it’s really just a hedge investment against *your* risk.Report
The point about insurance vs care is very basic and often ignored/unappreciated. Insurance is just a form of payment. In fact, in most insurance the insurance company spends over 95% of your insurance premiums on payments. In healthcare, insurance companies spend 80% on medical care and 15% on their administration of policyholder benefits/expenses. It would help greatly if people appreciated that insurance may pool risk for a given individual, but it doesn’t make healthcare more affordable from a societal perspective, and actually can increase healthcare consumption by lowering marginal costs faced by individuals (which is why we should insure only big things, not going to the doctor every time you get a cough). As usual, there is no free lunch in changing the form of payment.
As for the “pick your poison” of corporate bureaucrats vs govt bureaucrats, I think that is partially true, but maybe a bit narrow-minded. First, if we ration care via govt bureaucracy, there is no alternative and no market can function because the govt has given it away for zero (maybe unless it’s USPS, in which case even a loss making govt bureaucracy can lose to the competition). Second, you should prefer to have a choice, which the “corporate bureaucracy” option entails. You can say that all insurance companies are the same, but imagine if we decided that every state could have only one private insurance company and everyone had to go to them. Would service not deteriorate significantly? We can call the status quo bad, but let’s not fool ourselves that it cannot be radically worse. Third, why does the non-govt method of rationing have to involve “corporate bureaucrats” at all? Why couldn’t small towns and companies and schools and civic organizations form mutualized insurance pools? That exists with credit unions already. It makes tons more sense to me that a for-profit corporation entering into a contract with me to pay for my illnesses and then doing everything possible to welch on that contract up to the edge of reputational ruin. I see little reason to expect that a free market in health insurance would involve only or even primarily for-profit companies.
As for your view that Democrats understand the economics of insurance and why the elderly are a bad customer for them, I’m not so sure. At this level of diversification, I think insurance companies can price insurance to the same level of profitability for the elderly as for any other large demographic. More importantly, to suggest that in a non-govt-subsidized market “elderly consumers will have no meaningful choice at all” really misunderstands economic life. Just because one cannot afford something, does not mean that I don’t have a choice! Hey, I want to spend $100k/yr on healthcare but I only make $40k/yr. At some point, we have to decide when to say “too bad.” Now left-liberals don’t like that maybe (especially the ones who don’t understand economic constraints). The net economic value of an average human life has to be at least a wash, and preferably a positive that leaves value to future generations. We can have the govt subsidize healthcare in a variety of ways, and we can fund those subsidies in a variety of ways, but we need to come to grips with scarcity. And once we do, I’ll suggest to you that the best way of dealing with scarcity is not Medicare or expert panels or redistribution of resources, but consumer choice, decentralized power, and property rights.Report
Actually the concept of end of life care raises an issue that would make an interesting post. Other countries decide what the maximum their health insurace/government system will pay for a year of additional life at around 40k. If one were czar and could set the limit what would the number that society (either other insurance policy holders, or taxpayers) would pay for a treatment that extended life a year.Report
This sort of question is why it would suck to be a politician. Although frankly, I find the reality that there are 2yr old children who aren’t read to by their parents more upsetting than the reality that someone may die at 74 instead of 75 because no one wants to fund it. Are boomers really going to use their political power to fight to maximize their years on earth? This after legislating massive benefits to their generation while assigning most of the accumulated capital of the country to themselves and taking out a massive public debt to be paid by future taxpayers. I believe in property rights, but I can see myself supporting debt reduction via a one-time wealth tax just because the rule of law has been so corrupted.Report
My hunch? That’s a scare tactic. It plays off two facts: A) The recipients of Medicare generally like it and, even if they don’t, likely don’t want to see it go away, only expanded upon; B) people tend to prefer the devil they know to the devil they don’t.
A more accurate description would be that the Ryan voucher plan (as far as I know it) wants to replace the current Medicare system with a new voucher system. So while it is technically accurate to say that it “ends Medicare as we know it”, it is only a half-truth, since it doesn’t acknowledge that it replaces it with something we don’t know. Obviously, the question remains as to whether Ryan’s new system would be better or worse than the current incarnation of Medicare. My fairly uneducated understanding says that it would be worse, system-wide. If this is indeed the case, Democrats should take that angle… “He wants to end Medicare and give something worse,” though leaving off that last part makes it simply seem like he wants to leave old folks with no help from the government in securing insurance.Report
I actually think the charge is accurate. And it pissed me off when Rinse-my-Prius responded to that charge on Meet the Press by attacking Obama for “cutting” Medicare in PPACA. That is one of the dumbest talking points decisions that I can recall, since (1) it’s false, (2) it’s the opposite of your core position which is to reduce govt spending / scope of govt, and (3) the same fake cuts are in the Ryan budget which the House passed like 67 times already. It’s such bad strategy, that far from working upon the tired ears of old people, the Republicans will have to abandon it under pressure and try to “rise above” the issue to claim that they are serious about fixing Medicare and Obama is not. That should have been the response from the beginning – attack his “cuts” as fake and say that you are the serious policymakers (even if perhaps it turns out that you are serious, but seriously not what Americans want).Report
I think one of Comedy Central’s late night guys pointed out the absurdity of Republicans attacking Obama for (supposedly) cutting entitlements.
…round and round we go…Report
Elias – your post flies pretty much in the face of conventional wisdom. That’s cool. But it sounds like many Republican operatives / strategists see the Ryan-pick as putting Medicare reform on the table, which will cause Romney-Ryan to lose Florida. If they lose Florida, they lose the election (I think it was Chuck Todd who showed that Obama only need Florida and ANY other swing state to win the electoral college). It is quite possible that Romney-Ryan win the popular vote and lose the election (which will lead to awful contortions from politicians in both parties who spouted off about the 2000 election). Personally, the elephant-in-the-room for me is that Romney is a very poor politician, unlikable, thin-skinned, and unlikely to improve his game dramatically in time to win. Maybe the convention will change my mind, but it’s more likely that he will sound like a crazy Mormon pandering hawk, one of the least plausible and least attractive possible options to the electorate.Report
Do any of you, on either side of the table, actually BELIEVE that “future cuts” will actually be implemented? Haven’t we seen that with the budget enough times for these lies to recognized? Neither party has any interested in cutting spending; spending is what gets them re-elected.
SOP—kick the can down the road.Report
Ironically, I actually believe that the endgame of kicking the can down the road is that huge future cuts will be imposed … but, to your point, no, how could anyone believe given the evidence that future budgets are anything but the starting point for future budget discussions. They matter insofar as they set the baseline for future budget decisions, but unless the govt contracts in a binding way, we should not think of future budgets as much more than that.Report
I like Romney presentation about the medicare… I welcome those changes…Report