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Right Turn
Posted at 09:42 AM ET, 03/21/2012

Left outraged by increased progressivity in Medicare

No matter how many times liberals repeat that Rep. Paul Ryan’s Medicare reform plan will hurt the poor, it still isn’t true. The misrepresentation is so egregious and consistent that one can only conclude that an election narrative precludes honest analysis of the plan.

Let’s begin with three simple facts. First, Medicare as it currently exists is a boon to the middle class and well-to-do. It is part of a general transfer of wealth to the middle and upper class and a distortion of anti-poverty programs that has contributed to income inequality. As Ryan explained in his income inequality paper, “The CBO found that ‘Rapid growth in Medicare, which is not means-tested ... tended to shift more transfer income to middle- and upper-income households.’ ” He explains:

The growth in the fungible value of the Medicare benefit was not distributed evenly among income groups, but rather tilted toward the middle- and upper-income groups, in part because lower-income groups rely more on Medicaid. For the lowest-income quintile, the fungible value of the Medicare benefit as a share of household income nearly doubled, from 7.1 percent to 14.1 percent. But for the middle quintile, it more than quintupled, from 0.9 percent to 4.7 percent. For the fourth quintile (those households making between $42,202 and $60,557), it quadrupled, from 0.5 percent to 2.1 percent. This disparity in the distribution of per capita Medicare spending, driven primarily by rising health care costs, also contributed to the decline in the progressivity of transfer payments observed by the CBO.

Second, when President Obama included $500 billion in Medicare cuts as part of ObamaCare, these same liberal voices did not contend that this was an attack on the poor or “reverse Robin Hood” economics. You can argue that a mindless, across-the-board cut and establishment of a 15-person rationing board is bad policy; But it’s not an anti-poor move. Ryan sums this up in his budget plan: “The new health care law empowers bureaucrats at the expense of patients and providers, setting up an unelected board — the Independent Payment Advisory Board, or IPAB — tasked with cutting Medicare through formulaic rationing. One-­size-­fits-­all Washington-­based decisions to restrict certain treatments punish beneficiaries by hitting all providers of the same treatment with across-­the-­board cuts, with no regard to measures of quality or patient satisfaction.”

Third, Ryan’s proposal specifically and clearly states that Medicare for the poor will be preserved while the wealthy will have to pay more. The premium support element plan, which essentially transforms Medicare into a defined contribution plan, will be adjusted by income. In other words, Medicare becomes more progressive. Liberals certainly understand this concept (progressivity) when it comes to taxes. Ryan’s budget explains that even if the cap on Medicare costs kicks in (“the per-capita cost of this reformed program for seniors reaching eligibility after 2023 could not exceed nominal GDP growth plus 0.5 percent”), the poor still would be protected:

This budget also seeks to strengthen protections for lower-­income Americans. If costs rose faster than this established limit, those low-­income individuals who qualify for both Medicare and Medicaid (also known as “dual-­eligibles”) would continue to have Medicaid pay for their out-­of-­pocket expenses. Other lower-­income seniors (those who do not qualify for Medicaid but are still under a certain income threshold) would receive fully-­funded accounts to help offset any out ­of-pocket costs.

If those on the left thought about it for a moment, they should cheer the Republicans’ effort to “stick it to the rich” on Medicare costs. But of course that’s not going to happen. There’s an election ahead and spinning to be done for the Democrats.

By  |  09:42 AM ET, 03/21/2012

Categories:  2012 campaign, Obamacare

 
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