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Wonkbook: Paul Ryan and Ron Wyden want to bring Obamacare to Medicare

By Ezra Klein,

Back in February 2010, I sat down with Rep. Paul Ryan to talk about health-care reform. Ryan had his own bill back then: the Roadmap, which was, in many ways, a precursor to the budget he crafted for the Republicans earlier this year. But he was open to some other ideas, too. At one point, I asked him about Sen. Ron Wyden's Healthy Americans Act. "If I were a Democrat, it’s the bill I’d be on," Ryan replied. "He’s got more mandates than I’d like. But if Ron Wyden and I were in a room, we could hammer out a deal by tomorrow."

Chip Somodevilla

GETTY IMAGES

House Budget Committee Chairman Paul Ryan (R-WI) (L) holds a news conference in Washington on Dec. 7.

Well, Wyden and Ryan eventually did enter that room and hammer out a deal. But not for health-care reform. For Medicare reform. Their proposal, released Monday afternoon, envisions a kinder, gentler version of premium support than what Ryan proposed in his budget. In Ryan-Wyden -- Ryden? -- traditional fee-for-service Medicare is kept as one of the options, the private plans have to be at least as comprehensive as Medicare, and if the system can't control its costs, Congress takes a bite out of providers rather than passing higher premiums onto Medicare beneficiaries.

The Ryden plan is part of an ongoing attempt by the Republican Party to carve out a more politically sustainable position on Medicare reform. Conservative activists might like Ryan's original plan, but voters don't. Wonks might admire its boldness, but they admit that its numbers don't add up. And so you've seen efforts to sand the edges off the idea: Yuval Levin's "confident market" proposal and Mitt Romney's Medicare framework, are both efforts to rework Ryan's plan in a way that preserves traditional Medicare as an option and makes market reforms more palatable to voters. With the Ryden plan, Paul Ryan has joined them in that effort to leave the Ryan plan behind and replace it with something voters -- and some Democrats -- find less threatening.

But the secret of these types of premium-support platforms is that they are, in essence, a vindication of the Affordable Care Act. The cost containment is supposed to come through competition between plans, and works like this: "All plans, including the traditional fee-for-service option, would participate in an annual competitive bidding process to determine the dollar amount of the federal contribution seniors would use to purchase the coverage that best serves their medical needs. The second-least expensive approved plan or fee-for-service Medicare, whichever is least expensive, would establish the benchmark that determines the coverage-support amount for the plan chosen by the senior. If a senior chose a costlier plan than the benchmark, he or she would be responsible for paying the difference. Conversely, if that senior chose a plan that cost less than the benchmark, he or she would be given a rebate for the difference."

In other words, the competition is driven by tying the subsidy to the second-least expensive plan in the market. That way, the system gives beneficiaries a financial incentive to choose the cheaper plan. That is exactly-- exactly! -- how the Affordable Care Act works. The difference here is that the system will include a massive public option in Medicare, which is something conservatives refused to allow in the Affordable Care Act.

Conservatives often complain that the Congressional Budget Office does not score the salutary effects of competition. That's one reason, in fact, that Newt Gingrich says he wants to abolish the CBO. But if you believe that a competitive-bidding process will save far more money than the CBO says it will -- and that happens to be the belief underlying all of Ryan's Medicare plans -- then you should believe that the Affordable Care Act will save far more than the CBO says it will. Competitive bidding either works or it doesn't. But it can't only work for seniors. In fact, many health-care experts think seniors are the population among which its least likely to work, as many of their health costs are already locked in, and people with many health problems and established relationships with doctors don't want to switch plans midstream.

Back when Wyden was pushing the Healthy Americans Act -- a bill that had an individual mandate and many Republicans cosponsors -- he used to say that the fundamental compromise in health care was that Democrats wanted universal coverage and Republicans wanted choice. Wyden is going to find Democrats are not very happy with him for this compromise because he let Ryan wiggle out of his side of the deal: Wyden is a Democrat signing onto a major choice-based reform, but Ryan, as a Republican, is still calling for the full repeal of the Affordable Care Act, and he has never proposed a universal-coverage plan to replace it.

There are ultimately two ways of looking at health-care politics right now. One is that the two parties actually agree on quite a lot. Partisan politics often obscures that, but the fact of the matter is that Republicans want a competitive-bidding process with a public option in Medicare and Democrats want one for the under-65 set. Wyden is an example of this kind of politician. The other is that there is no policy consensus, and these are just tactical battles in which Republicans want choice reforms in order to break down the Medicare program but will never accept that sort of universal structure on the under-65 market. Democrats look at Ryan's positions and see him more in this camp.

If the center of American politics is where Wyden is, then it's possible that the two parties will be able to hammer out a deal. If it's where Ryan is, they won't.

Top stories

1) Negotiations on the payroll tax cut have hit a wall, reports Rosalind Helderman: "Negotiations over how to extend a payroll tax holiday for 160 million Americans and avoid a government shutdown this weekend ground to a halt Wednesday after a standoff in the Senate over how to proceed. Amid the gridlock, Cabinet secretaries for the first time formally alerted affected federal workers Wednesday to the possibility of a shutdown...If there was any sign of progress, it was that Senate Democratic leaders met with President Obama on Wednesday at the White House to weigh whether to drop their demand that the $120 billion payroll tax cut be paid for with a new surtax on millionaires. Republicans have rejected the idea, but it was not clear Wednesday whether that concession from Democrats would be enough to produce a deal."

2) The White House wants a stop-gap, reports Felicia Sonmez: "The White House late Wednesday called on Congress to approve a short-term resolution to keep the government running past Friday, as efforts to pass a payroll tax cut extension and a broader funding measure have devolved into a political game of chicken. The move by the White House comes as House Republicans suggested after a closed-door meeting that they may attempt to pass a sweeping funding measure with Republican support alone and then head out of town, leaving the Senate to deal with House-passed versions of both that bill and a payroll tax package opposed by Democrats. Republicans have argued that Democrats are refusing to sign off on the funding measure to gain leverage as leaders negotiate a deal on the payroll tax cut."

3) Germany is digging in, report Bernd Radowitz, Christopher Emsden and William Horobin: "German Chancellor Angela Merkel, whose positions have shaped the response to the crisis, restated her position that common euro-zone bonds were no solution to the turmoil--and said she opposed lifting the cap on the euro-zone bailout funds beyond €500 billion ($651.2 billion). Euro bonds 'aren't suitable as a rescue measure,' she told the German parliament...With many in Europe still hoping against hope that the European Central Bank will step in more aggressively to buy bonds and bring down borrowing costs for struggling governments, Jens Weidmann, the president of Germany's Bundesbank and member of the ECB governing council, indicated that his opposition hadn't softened. The idea that the ECB should print money to help finance some debt-ridden euro-zone states should be put to rest for good, Mr. Weidmann said."

4) Balanced budget amendments failed in the Senate, reports Scott Wong: "A balanced budget amendment failed in the Republican-led House last month. On Wednesday, the Democratic Senate made clear it wouldn’t fly there either. The Senate defeated rival Republican and Democratic proposals, fulfilling a requirement from this summer’s debt-limit law that both houses vote this year on a constitutional amendment forcing the government to balance its budget. The Republican plan, authored by the Senate Finance Committee’s top Republican, Orrin Hatch of Utah, failed on a straight party-line 47-53 vote, falling 20 votes shy of the two-thirds threshold required to change the Constitution. The entire GOP Conference backed the amendment, while Democrats were united in their opposition. The Democratic plan, authored by Sen. Mark Udall of Colorado, was defeated by a wider margin -- on a 21-79 vote."

Top op-eds

1) Let private plans compete with Medicare, write Ron Wyden and Paul Ryan: "Under our plan, Americans currently over the age of 55 would see no changes to the Medicare system. For future retirees, starting in 2022, our plan would introduce a 'premium support' system that would empower Medicare beneficiaries to choose either a traditional Medicare plan or a Medicare-approved private plan. Unlike Medicare Advantage, these private plans would compete head-to-head with traditional, fee-for-service Medicare on a federally regulated Medicare exchange...All health plans that participate in the Medicare exchange would be required to offer benefits that are at least as comprehensive as those covered by traditional Medicare, and participating plans would be forbidden to charge discriminatory premiums and would be required to cover everyone regardless of age, gender or health status."

2) The EU can learn from the US's fiscal union, writes David Wessel: "Consider this hypothetical: Illinois, already paying higher interest rates than other states because of its debt load and dysfunctional politics, runs into serious trouble paying its debts. Ratings plunge; worries mount. What happens to the yield investors demand to lend to Ohio? Look at Europe, and the answer seems clear: Trouble in one place with a lot of debt pushes up borrowing rates for others with a lot of debt. But that isn't what has happened in the U.S., according to a new International Monetary Fund working paper. Examining the ups and downs of 10-year municipal debt from 2005 through early 2011, it finds that an increase in borrowing costs in one state generally results in lower borrowing costs in others, the opposite of the spillovers so evident in Europe."

3) Europe doesn't need political integration, writes Martin Feldstein: "Although Chancellor Merkel, French President Nicolas Sarkozy and EU President Herman van Rompuy tried to use the current crisis to advance their political goal of European integration, their failure to achieve that goal need not prevent a lowering of the interest rates on the sovereign bonds of Italy, Spain and others. Those interest rates can be reduced by individual country policies to bring down current and future budget deficits. Italy has a good shot at persuading investors that it has a favorable long-term budget outlook. Its fiscal deficit is now less than 4% of GDP. Even before the budget tightening by the new government of Mario Monti, the International Monetary Fund projected that Italy would have a balanced budget in 2013...Greece should default on its debt, leave the euro zone, and return to a more competitive drachma."

4) Romney's private equity experience would help him as president, writes Steven Kaplan: "On average, private-equity firms make companies more productive and, in so doing, have delivered strong returns to their customers. At the same time, PE firms don’t have much of an effect on net employment one way or the other. This suggests that Romney should argue his PE experience is very relevant to his quest for the presidency. As president, he would need to cut costs, particularly entitlements. When appropriate, PE firms cut costs. He would also need to promote policies that encourage job creation and growth. When appropriate, PE firms invest in and expand their businesses and employment. And the firms make these cuts and investments not for their own sake, but to deliver results for their customers. Similarly, the president’s job isn’t to cut or expand programs for their own sake, but to deliver results to the end customers -- the voters."

5) "No Labels" actually has good ideas, writes David Weigel: "'Make Congress Work!' (the exclamation point is theirs) is a list of 12 ideas, crowdsourced over a couple of months and debuted by a panel that included two actual elected Republicans, Rep. Tom Petri of Wisconsin and Sen. Dean Heller of Nevada. There are a few nonclunkers among those 12 ideas. Presidential appointments: Give them up-or-down votes within 90 days. Filibusters: If people are going to do it, make them stand up and empty their lungs out, Jimmy Stewart-style. Both good ideas, both responses to actual legislative crises, both sort of picked up and then fumbled when Democrats had a larger Senate majority. Former Sen. Evan Bayh was milling around, posing for photos and chatting with No Label-ers (this term of art is also theirs). 'We almost got this package of filibuster reforms passed before I left,' he said, not sounding particularly annoyed that he was now left to reform the body from the outside."

Boss interlude: Bruce Springsteen plays "American Slang" with the Gaslight Anthem.

Got tips, additions, or comments? E-mail me.

Still to come: Mitt Romney's bankruptcy record in the private sector is mixed; 2.5 million young adults are taking advantage of a health reform provision; the piracy debate in Congress is heating up; Keystone is becoming a campaign issue; and a skydiving dog.

Economy

Mitt Romney had a mixed record on bankruptcies during his business career, reports Jia Lynn Yang: "With Newt Gingrich accusing Mitt Romney this week of 'bankrupting companies' during his time at Bain Capital, Romney’s wildly lucrative business career continues to draw fire from opponents who seek to paint him as a heartless financier. So did Romney wreck companies as Gingrich says he did? Under Romney’s leadership at Bain, which spanned from 1997 to 1985 and from 1992 to 2000, at least five companies eventually filed for bankruptcy after being acquired by the private equity firm. In some of those cases, investors still made a profit as workers lost their jobs. Even more troubling to some, Bain arguably drove some companies to the ground by taking on more debt to give investors dividends earlier."

China will tax US car imports, report John Reed and Alan Beattie: "China will impose retaliatory duties on US car imports in the latest sign of trade friction between the world’s two largest economies. In a statement, China’s commerce ministry said on Wednesday that it was taking action in response to damage to its car industry from US “dumping and subsidies”. The move will affect several larger vehicles popular in China, including sport utility vehicles made by Germany’s BMW and Mercedes-Benz brands at their US plants. Shares of BMW and Daimler, which owns Mercedes, fell 5 per cent and 3 per cent respectively on Wednesday. China overtook the US in 2009 as the world’s largest vehicle market, and sales there account for a substantial chunk of profits for BMW and Mercedes, who build the SUVs they sell globally in North America."

Worker-owned businesses are taking over, writes Gar Alperovitz: "more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing. Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions. And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation."

Adorable journalism interlude: Brian Williams interviews Marcel the Shell.

Health Care

2.5 million people got health insurance through the young adult provision in health reform, reports Louise Radnofsky: "About 2.5 million young adults have gained health-insurance coverage since the health-overhaul law let people stay on their parents' plan until they turn 26, according to government figures released Wednesday...Under the law, most insurance plans had to allow parents to start adding their adult children in September 2010. Many insurance plans made the change in spring 2010 to accommodate children near college-graduation time. The percentage of those aged 19 to 25 with insurance rose to 73% this past June from 64% in September 2010, the National Center for Health Statistics found in its latest survey of insurance coverage. That translates to about 21.5 million young adults, up from 19 million. The administration previously estimated that one million additional young adults had gained coverage by the end of March 2011 under the law."

The "essential benefits" rule is coming soon, reports Jason Millman: "As of 2014, health plans sold through new state-based health insurance marketplaces and state Medicaid plans must offer a minimum set of benefits and services in the individual and small group markets. It’s called the 'essential health benefits package.' The health care law spells out 10 categories of benefits that must be covered by the package, but it left the final call up to the Department of Health and Human Services. After a year of intense lobbying around one of the law’s most politically sensitive provisions, the Obama administration is expected to soon tip its hand on how it will define those benefits. In worst-case scenarios, the administration could disappoint its closest allies by giving health plans too much wiggle room -- or give the law’s fiercest critics another reason to say it will lead to rationing and bankrupt the country."

Domestic Policy

The Congressional piracy debate is heating up, reports Edward Wyatt: "Two bills, broadly supported on both sides of the political aisle, aim to cut off the oxygen for foreign pirate sites by taking aim at American search engines like Google and Yahoo, payment processors like PayPal and ad servers that allow the pirates to function. Naturally the howls of protest have been loud and lavishly financed, not only from Silicon Valley companies but also from public-interest groups, free-speech advocates and even venture capital investors. They argue -- in TV and newspaper ads -- that the bills are so broad and heavy-handed that they threaten to close Web sites and broadband service providers and stifle free speech...Google itself has hired at least 15 lobbying firms to fight the bills...Some of the biggest business lobbies like the Motion Picture Association of America and the United States Chamber of Commerce are supporting the bills."

A Senate panel backed an insider trading ban, reports Brody Mullins: "A Senate panel on Wednesday approved legislation to explicitly prohibit members of Congress from trading on insider information and to increase disclosure about the stock-trading of members of Congress. But the Senate Homeland Security and Governmental Affairs Committee dropped a provision that would have created new rules and disclosure for a growing number of businesses that gather political intelligence for Wall Street traders...The Senate bill makes it clear that insider-trading rules apply to Congress, something many legal experts have said was in doubt because lawmakers don't have an explicit duty to keep private the non-public information they hear in the halls of Congress. The legislation also requires lawmakers to disclose their stock trades within 30 days."

Social Security is reviewing its disability benefits program, reports Damian Paletta: "The Social Security Administration has commissioned an independent review of the federal disability system amid concerns it awards benefits to those who don't deserve them and denies benefits to those who do. A focus of the study is expected to be the work of roughly 1,500 administrative-law judges, who hear appeals by applicants but whose award rates vary widely. Meanwhile, the Social Security Administration next week plans to stop notifying people applying for benefits of which judge they've been assigned for their case. This is being done, someone briefed on the plan said, to prevent applicants and their lawyers from trying to shop their appeals to the most lenient judges. The review will be undertaken by the Administrative Conference of the United States, which studies government policy in Washington."

We should put kids to work, just not how Newt wants to, writes Samuel Redman: "Mr. Gingrich, the former House speaker who is seeking the Republican presidential nomination, is onto something when he says we should find ways to hire unemployed young people to maintain our educational infrastructure. And we can -- by reviving the National Youth Administration. Founded in 1935, the N.Y.A. aided over four million people between the ages of 16 and 25 in the midst of the Depression, providing desperately needed stipends to students while also working to improve and maintain the infrastructure of places like schools, universities and museums...In an era defined by ballooning levels of student debt and heightened levels of unemployment among young people...a program modeled on the N.Y.A...would not only preserve our infrastructure...but throw a lifeline to the country’s young."

Adorable animals supporting the troops interlude: A dog skydives with his US Army vet owner.

Energy

Republicans are making Keystone an election issue, report Juliet Eilperin and Steven Mufson: "A month ago, the Obama administration appeared to have defused a contentious debate over whether to approve a pipeline to transport Canadian oil to the Gulf Coast, but a political shift in Nebraska has given Republicans an opening to reignite the controversy. Republicans are pushing to accelerate the timetable for the pipeline decision and make it a major election issue, emphasizing jobs and energy security. And environmentalists, who just weeks ago were savoring a political victory, are throwing themselves back into the fight both outside and inside the Beltway...Republicans are hammering away on the issue both in the halls of Congress and on the presidential campaign trail, trying to force President Obama to allow the rest of the project to move forward while Nebraska reassesses its part of the route."

Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

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