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Right Turn
Posted at 03:52 PM ET, 06/13/2011

Is a Medicare deal possible?

You can always count on Paul Krugman to give voice to the most partisan elements on the left. He doesn’t disappoint today:

Like Republicans who want to end Medicare as we know it and replace it with (grossly inadequate) insurance vouchers, Mr. [Sen. Joe] Lieberman describes his proposal as a way to save Medicare. It wouldn’t actually do that. But more to the point, our goal shouldn’t be to “save Medicare,” whatever that means. It should be to ensure that Americans get the health care they need, at a cost the nation can afford.

And here’s what you need to know: Medicare actually saves money — a lot of money — compared with relying on private insurance companies. And this in turn means that pushing people out of Medicare, in addition to depriving many Americans of needed care, would almost surely end up increasing total health care costs.

This is poppycock, but it’s revealing poppycock. The biggest driver of health-care costs is Medicare “as we know it,” which is precisely why it’s not sustainable. ObamaCare has been a complete policy belly-flop in this regard, since virtually everyone understands that it will never make good on its promise of severe underpayments to providers.

What Krugman’s screed also conveys is that most partisan Democrats are petrified of any reasonable deal on Medicare. They’d much prefer to have nothing and hang on to the anti-Ryan demagoguery. But there are nervous pols in the middle, moderate Democrats and even some Republicans who’d rather have an actual deal. On the Democratic side they worry that with high unemployment and no deal on Medicare, the Democrats are vulnerable to the claim that they haven’t governed. On the Republican side, there are those who are nervous about the Ryan plan or who like it but understand it can’t be passed in this Congress. There are enough players who may want a way out of the current stalemate.

So along comes the Lieberman plan, which among other things seeks to raise the retirement age. (Funny that Krugman grouses about this now but once embraced raising the retirement age.)

Meanwhile, there is Tim Pawlenty who’s previewed a plan that would give seniors options, but like Lieberman’s, preserve Medicare as one option. A Capitol Hill health-care guru points out to me: “Both the Domenici-Rivlin proposal from last year and the Breaux-Thomas idea from the late 90s would have worked this way: the system becomes premium support but traditional Medicare is one of the competitors in the market (with limits on its ability to throw its weight around). If it turns out to be more expensive than other options (which is likely) then people who choose it would have to pay the difference. It’s a way of incentivizing people to move away from the fee for service system over time, saving money all the while since the federal contribution is defined. The savings wouldn’t be as great as the Ryan budget (though presumably they also wouldn’t wait ten years to start) but the concept would be very similar, savings would be pretty serious, and the politics could be a little easier.”

By gosh, could the solution be a Lieberman-Pawlenty plan? Republicans wouldn’t go for a tax hike, but keeping Medicare as an existing option could be viable. None other than Paul Ryan said as much when asked in April about keeping Medicare as an option:

“I don’t have a problem with that,” Ryan replies. “I think it’s a fine idea worth considering. [Bill Clinton’s budget director] Alice Rivlin and I have talked about that in the past.”

But could his budget achieve the same amount of savings if future seniors had that choice?

Ryan says it’s possible “because it wouldn’t be an open-ended fee for service system, like the current one for the under-55 plan. They would get a set amount of money to go toward the traditional fee for service and then, like current Medicare they’d probably buy coverage to supplement it. I would think a person would prefer a comprehensive plan like Medicare Advantage is today, but you can do this in a way that doesn’t have a budgetary effect, that it doesn’t bankrupt the program.”

He didn’t care for a reform that was simply based on fiddling with payment options (something Pawlenty had talked about before previewing a more comprehensive approach). “The president wants his IPAB [Independent Payment Advisory Board] to do essentially the same thing. It’s very difficult for a centralized bureaucracy to do that. . . . When they get these targets, like the president is giving them, you know a half a trillion dollars, they just sort of do indiscriminate cutting across the board, lowering reimbursement to providers, causing providers to drop out of the program altogether.”

In that mix there may well be a deal that is substantively positive and politically feasible. But first the White House will have to decide: Do they want a campaign bumper sticker or a genuine accomplishment, saving Medicare? The latter would of course require that it admit that ObamaCare was a bust when it comes to retirees.

The man in the driver’s seat is likely Minority Leader Sen. Mitch McConnell (R-Ky.). He’s said all along that a bipartisan deal on entitlement plans is possible only with divided government. The House can’t offer a compromise that steps away from the Ryan plan, the Senate Democratic leadership is paralyzed and frankly useless, and the White House hasn’t decided between governing and campaigning. Maybe McConnell, Lieberman and Pawlenty should sit down for a chat. Just saying.

By  |  03:52 PM ET, 06/13/2011

Categories:  2012 campaign, Budget, Obamacare

 
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