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Watch the policies, not the caps

By Ezra Klein,

The design whizzes at The Washington Post have a worked up a neat interactive graphic that lets you compare the various deficit plans both in terms of macro effects -- how much deficit reduction, how much debt reduction -- and their specific policies.

But like all of these exercises, it’s really just measuring the tightness of various caps. Ryan’s budget says Medicare and Medicaid spending won’t grow any faster than inflation. That’s a very tight cap. The Simpson-Bowles plan holds Medicare to GDP+1%. That’s a somewhat looser cap. So if you just graphed their health-care savings, the Ryan plan would look really good.

But imagine that both plans fail and that, in the real world, Ryan’s plan would hold Medicare to GDP+3% while the Simpson-Bowles plan would hold it to GDP+1.5%. In that case, neither cap succeeded and none of these graphs were right. But the Simpson-Bowles plan was clearly more successful than the Ryan plan, despite the fact that it looked worse on the initial graphs.

Which is only to say that these graphs are of limited utility at best. Just like with health-care reform, the question isn’t whether the bill says it will save money, but whether there’s a plausible reason to believe it will save money. And the more dramatic the promised savings are -- which is to say, the better the bill looks on these graphs -- the more persuasive that story has to be. So far, I’ve not heard anything even approaching a persuasive story for the Ryan plan’s savings, as his mechanisms — block-granting Medicaid and voucherizing Medicare — don’t have a track record of success. Making health care cheaper is about making sick people less expensive, and whatever those policies do, they don’t do that. More on that here.

But whether you agree with my analysis or not, the fact remains that it’s the policies and procedural reforms behind the caps, and not the caps themselves, that really matter, even as it’s really just the caps themselves that show up on these charts. So by all means, use these charts to get an idea of the targets the various plans are aiming for. But keep in mind that the important question is whether they’ll hit them, and that question can only be answered by digging into the details of these plans.

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