Pharma & Healthcare
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3/16/2013 @ 12:32AM |16,518 views
Paul Ryan's Plan to Balance the Budget in Ten Years Relies on...Obamacare?
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MARION, OH - OCTOBER 28: Republican vice
presidential candidate U.S. Sen. Paul Ryan (R-WI) smiles during a
campaign rally at the Marion County Fairgrounds on October 28, 2012 in
Marion, Ohio. (Image credit: Getty Images via @daylife)
The Ryan budget pockets Obamacare’s Medicare cuts and tax increases
The way in which the proposed House budget resolution treats Obamacare is central to how Ryan was able to balance the budget in ten years. Over a ten-year period, Obamacare spends $1.9 trillion on subsidizing insurance coverage for uninsured Americans. The law funds that additional spending by cutting Medicare by $716 billion, and raising taxes by $1.2 trillion. The Path to Prosperity keeps, but repurposes, Obamacare’s Medicare cuts and tax increases, while repealing the law’s spending on the uninsured.
Those two components can be thought of as accounting for nearly $2 trillion of the Ryan budget’s $4.6 trillion in net deficit reduction. In budget-speak, the Path to Prosperity includes these spending cuts and tax increases in the budget “baseline.” Paul Ryan would use President Obama’s $1.8 trillion in tax hikes—from Obamacare and the fiscal-cliff deal—to fund a comprehensive reform of the tax code, with fewer loopholes, deductions, and brackets.
I don’t have a problem with that, and neither does Grover Norquist’s influential anti-tax group, Americans for Tax Reform. “The House GOP budget calls for no net tax increase [relative to] the current law revenue baseline,” said ATR in a statement. “Tax reform is not about bringing in more tax revenue to the government. It’s about bringing in the same amount of revenue more intelligently, with lower tax rates and a tax base which subjects all consumed income to taxation once and only once.”
So far, so good. But the budget math on the Medicare side is a bit trickier. As I noted last summer in National Review, if the Ryan budget ever were to become law, Congress would have to specify how to execute those $716 billion in Medicare cuts, if they aren’t being done through Obamacare. They won’t simply happen on their own. Congress would either need to accelerate Paul Ryan’s Medicare reforms, or adopt other reforms, such as gradually increasing Medicare’s retirement age and consolidating its cost-sharing provisions.
This is not a trivial point. Over the ten-year budget window, Paul Ryan’s supposedly cataclysmic Medicare reforms will save $129 billion. The Obamacare Medicare cuts are more than 5 times as large.
Contradictory rhetoric on subsidized insurance exchanges
During the 2012 campaign, I frequently called out liberals for describing Paul Ryan’s premium support plan for Medicare in apocalyptic terms, when these same liberals strongly supported using exactly the same mechanism for covering the uninsured. “If premium support is ‘fatal’ for Medicare, why is it good enough for Obamacare?” I asked in one such piece last September.
Fairness requires me to call out the Ryan budget for being inconsistent in the reverse fashion: describing Obamacare’s exchanges in harsh terms, while praising exchanges for Medicare.
On page 32, the Path to Prosperity white paper declares, “[Exchange] subsidies can only be used to purchase plans that meet standards determined by the new health-care law…[an] enormous market distortion…the new law couples these subsidies with a mandate for individuals to purchase health insurance and bureaucratic controls on the types of insurance that may be legally offered. Taken together, these provisions will weaken the private-insurance market. Exchange subsidies take the health-care market in the wrong direction, breaking what’s working at a time when policymakers need to fix what’s broken.”
Seven pages later, the white paper describes a great new option for seniors, in which “Medicare would offer them a choice of private plans competing alongside the traditional fee-for-service option on a new Medicare Exchange…[Medicare] would require private plans to cover at least the actuarial equivalent of the benefit package offered by the fee-for-service option…This budget requires every plan in the Exchange to offer guaranteed issue and community rating. Insurers would be unable to deny coverage based on pre-existing conditions. And they would be unable to impose prohibitively high costs on patients with chronic health problems. Every senior would have access to a plan that offered at least as much value as fee-for service Medicare. So every senior would be able to choose a plan that works for them—without fear of denial or discrimination.”
You could take Paul Ryan’s description of the Medicare exchange, change “Medicare” to “Obamacare,” and turn it into a campaign leaflet for the Affordable Care Act’s insurance exchanges.
Exchanges are the solution, not the problem
The inconsistency on both sides is understandable if you think about it ideologically. Leftists want to move the health care system in a government-oriented direction, and Obamacare helps them do that. Conservatives want to move it in a market-oriented direction, and introducing exchanges into Medicare helps them do that. But both sides have, for their own reasons, ended up in the same place: offering subsidized, privately-sponsored insurance on a regulated exchange.
These exchanges can honestly be called a centrist solution. They contain some market-oriented aspects, and some government-oriented aspects. Like the Swiss system from which they are derived, they have properties that both sides can appreciate, and properties that both sides can complain about. Obamacare’s exchanges, in particular, contain needlessly costly and cumbersome mandates and regulations.
Most importantly, the Ryan budget suffers from what Matt Continetti calls the double bind. Ryan probably doesn’t believe he can speak frankly about the similarities between Obamacare’s exchanges and his Medicare exchanges, because conservatives who remain committed to repealing Obamacare won’t like it. Eventually that will change, probably after the 2014 elections. And that’s when we’ll learn the true future of entitlement and health-care reform.
Follow Avik on Facebook and on Twitter at @avik.
UPDATE: Some of the commenters have noted, fairly, that I’ve critiqued the Ryan budget without comparing it to the weak and irresponsible budget proposed by Senate Democrats, one that would raise taxes by nearly $1.5 trillion and make no real spending cuts. I’ll echo the editors of the Washington Post in saying that the Democratic budget “deepens these senators’ commitment to an unsustainable policy agenda.”
INVESTORS’ NOTE: Migrating seniors to a premium support-style system would dramatically expand the footprint of private insurers, such as Aetna (AET), Cigna, (CI), Humana (HUM), United (UNH), and WellPoint (WLP).
end quote from:
http://www.forbes.com/sites/aroy/2013/03/16/paul-ryans-plan-to-balance-the-budget-in-ten-years-relies-on-obamacare/?partner=yahootix
