May 25, 2011

Now that Paul Ryan’s Medicare plan has led Republicans off a political cliff, it’s time to expose the Achilles heel in the Democrats’ argument.

No, I’m not saying the old “Mediscare” won’t work to bludgeon the GOP in 2012 — just as the GOP found it worked to dice up Democrats in 2010 — but a little intellectual honesty is in order if liberal goals are ultimately to be achieved. Democrats elated at the coup in New York’s 26th Congressional District and at the sight of top Republicans scurrying to distance themselves from Ryan’s plan should thus use what I call “responsible demagoguery” on Medicare: harsh politics that leave sound policy intact.

Let me explain. The consensus critique of Ryancare starts by observing that the “premium support” or voucher it would give each senior to help buy private insurance is designed to grow at a slower rate than the expected trajectory of health-care costs. Over time, as the Congressional Budget Office has noted, this gap would shift more and more premium costs to seniors, many of whom can’t afford them. That may in some bookkeeping sense “solve” the federal government’s Medicare problem, but only by leaving millions of sick grandmothers in the cold.

While this line of attack seems plausible at first — especially when Democrats have a CBO report they can wave in support — it’s actually based on two dubious premises. The first is that America’s inefficient health-care sector will be permitted to continue its spendthrift ways. The second is that premium support itself can’t be a way to help encourage the system to end them.

As can never be said often enough, the United States spends 17 percent of GDP on health care, while every other advanced nation spends 10 or 11 percent. Those other nations insure everyone, while we still have 50 million neighbors who lack basic coverage. At the same time, the United States doesn’t have better health outcomes to show for all this extra spending, and it experiences huge regional variations in the utilization of procedures and treatments. Observers of all stripes agree that these facts mean our system is radically inefficient. (And given that mighty Singapore spends just 4 percent of GDP with as good or better outcomes than ours, the “radically” is justified).

Against this backdrop, consider Ryan’s plan. A few bipartisan trims aside, Ryan would basically let Medicare rise on its current outsized trajectory for another full decade. Then, from that substantially higher base of per-senior spending in 2021, Ryan would limit the annual increase in the support seniors receive to the rate of inflation. Ryan chose this number (which is much lower than the growth rate of GDP plus 1 percent that he and my former boss Alice Rivlin used when they were working on the idea) mostly for reasons of political optics; that is, Ryan needed his long-term budget projections to show some serious shrinkage in deficits and debt, and because he dishonestly pretends taxes don’t need to rise as the boomers age, he had to show more savings from Medicare.

Put this numbers game aside, however, and you still have the multitrillion-dollar point: In any other wealthy nation, a Ryan-sized voucher would more than suffice to ensure high-quality health care for seniors. In Singapore, it would be seen as offering an outrageous bonanza for the Medical Industrial Complex.

If you’re with me so far, the Democratic case on Medicare (as well as the GOP’s case last election) is therefore caught between two claims that can’t both be true: (1) we spend much more on health care than anybody else without better results; and (2) if we cut the growth of this spending to below the rate of GDP growth, we’d have to curtail Americans’ access and quality of care. No matter how often and how loud the interest groups, politicians and other forces of the status quo scream the latter, it cannot be true if the former is a fact.

And America’s health-care inefficiency is, in fact, a fact.

Ryan’s plan is thus a roundabout way of bringing us to the question of how we can best wring out the excess in American health care. The politics of any such effort are perilous not only because seniors are easily scared, but because every dollar of health care “waste” is somebody’s dollar of income.

I can’t say premium support is the answer. But I also can’t say premium support might not be part of the answer — and neither can anyone else.

None of this changes the fact that Ryan’s overall budget blueprint is deeply flawed. I’d wager that no pundit has hit Ryan harder, more repeatedly, or with greater risk of leaving readers comatose than has yours truly over his plan’s record debt and bogus “fiscal conservatism.”

Even so, Democrats should want the flexibility after 2012 to include ideas like premium support in their own agenda. It was invented by Democratic economists, after all. And if health care’s cost growth is not seriously slowed there will soon be no public monies left for poor children, infrastructure, or any other progressive purpose.

In light of all this, what’s an entitlement-reform-minded-but-win-at-all-costs-Democrat to do? Responsible demagogues will shout that “Republicans are wrong to unravel Medicare in order to cut taxes for the rich.” Hammering home the values this GOP choice reveals is entirely fair and will do the trick politically.

But farsighted Democrats shouldn’t trash the idea of seeking serious savings from Medicare, because, like it or not, the future of liberal achievement in an aging America depends on it. I know Democrats don’t want to hear this now that there’s blood in the water after the upset in New York. But someone has to say it.

mattino2@gmail.com