Health Summit 2010
Rep. Paul Ryan on health inflation at White House health summit
Thursday, February 25, 2010; 4:42 PM
BOEHNER: Mr. President -- Mr. President, Mr. Ryan is going to open this conversation on behalf of us.
RYAN: Thank you.
Look, we agree on the problem here. And the problem is health inflation is driving us off of a fiscal cliff.
Mr. President, you said health care reform is budget reform. You're right. We agree with that. Medicare, right now, has a $38 trillion unfunded liability. That's $38 trillion in empty promises to my parents' generation, our generation, our kids' generation. Medicaid's growing at 21 percent each year. It's suffocating states' budgets. It's adding trillions in obligations that we have no means to pay for it.
Now, you're right to frame the debate on cost and health inflation. And in September, when you spoke to us in the well of the House, you basically said -- and I totally agree with this -- I will not sign a plan that adds one dime to our deficits either now or in the future.
Since the Congressional Budget Office can't score your bill, because it doesn't have sufficient detail, but it tracks very similar to the Senate bill, I want to unpack the Senate score a little bit.
And if you take a look at the CBO analysis, analysis from your chief actuary, I think it's very revealing. This bill does not control costs. This bill does not reduce deficits. Instead, this bill adds a new health care entitlement at a time when we have no idea how to pay for the entitlements we already have.
Now, let me go through why I say that. The majority leader said the bill scores as reducing the deficit $131 billion over the next 10 years. First, a little bit about CBO. I work with them every single day -- very good people, great professionals. They do their jobs well. But their job is to score what is placed in front of them. And what has been placed in front of them is a bill that is full of gimmicks and smoke-and-mirrors. Now, what do I mean when I say that?
Well, first off, the bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending.
Now, what's the true 10-year cost of this bill in 10 years? That's $2.3 trillion.
It does couple of other things. It takes $52 billion in higher Social Security tax revenues and counts them as offsets. But that's really reserved for Social Security. So either we're double-counting them or we don't intend on paying those Social Security benefits.
It takes $72 billion and claims money from the CLASS Act. That's the long-term care insurance program. It takes the money from premiums that are designed for that benefit and instead counts them as offsets.
The Senate Budget Committee chairman said that this is a Ponzi scheme that would make Bernie Madoff proud.
Now, when you take a look at the Medicare cuts, what this bill essentially does -- it treats Medicare like a piggy bank. It raids a half a trillion dollars out of Medicare, not to shore up Medicare solvency, but to spend on this new government program.
Now, when you take a look at what this does, is, according to the chief actuary of Medicare, he's saying as much as 20 percent of Medicare's providers will either go out of business or will have to stop seeing Medicare beneficiaries. Millions of seniors who are on -- who have chosen Medicare Advantage will lose the coverage that they now enjoy.
You can't say that you're using this money to either extend Medicare solvency and also offset the cost of this new program. That's double counting.
And so when you take a look at all of this; when you strip out the double-counting and what I would call these gimmicks, the full 10- year cost of the bill has a $460 billion deficit. The second 10-year cost of this bill has a $1.4 trillion deficit.
And I think, probably, the most cynical gimmick in this bill is something that we all probably agree on. We don't think we should cut doctors 21 percent next year. We've stopped those cuts from occurring every year for the last seven years.
We all call this, here in Washington, the doc fix. Well, the doc fix, according to your numbers, costs $371 billion. It was in the first iteration of all of these bills, but because it was a big price tag and it made the score look bad, made it look like a deficit, that bill was -- that provision was taken out, and it's been going on in stand-alone legislation. But ignoring these costs does not remove them from the backs of taxpayers. Hiding spending does not reduce spending. And so when you take a look at all of this, it just doesn't add up.
And so let's just -- I'll finish with the cost curve. Are we bending the cost curve down or are we bending the cost curve up?
Well, if you look at your own chief actuary at Medicare, we're bending it up. He's claiming that we're going up $222 billion, adding more to the unsustainable fiscal situation we have.
And so, when you take a look at this, it's really deeper than the deficits or the budget gimmicks or the actuarial analysis. There really is a difference between us.
And we've been talking about how much we agree on different issues, but there really is a difference between us. And it's basically this. We don't think the government should be in control of all of this. We want people to be in control. And that, at the end of the day, is the big difference.
Now, we've offered lots of ideas all last year, all this year. Because we agree the status quo is unsustainable. It's got to get fixed. It's bankrupting families. It's bankrupting our government. It's hurting families with pre-existing conditions. We all want to fix this.
But we don't think that this is the answer to the solution. And all of the analysis we get proves that point.
Now, I'll just simply say this. And I respectfully disagree with the vice president about what the American people are or are not saying or whether we're qualified to speak on their behalf. So...
... we are all representatives of the American people. We all do town hall meetings. We all talk to our constituents. And I've got to tell you, the American people are engaged. And if you think they want a government takeover of health care, I would respectfully submit you're not listening to them.
So what we simply want to do is start over, work on a clean- sheeted paper, move through these issues, step by step, and fix them, and bring down health care costs and not raise them. And that's basically the point.
OBAMA: I'm going to call on Xavier Becerra, but I just want to follow up on a couple points. There are some strong disagreements on the numbers here, Paul, and, you know, but I don't want to get too bogged down in -- the first question I have is whether your side thinks Medicare Advantage is working well.
Because I think it's important just to point out that, when we keep on talking about cuts in Medicare, what we're really talking about is what Joe alluded to, which is, a decision was made a while back to set up a system in which Medicare costs, let's say, $1 under the government program that 80 percent of people still use and are perfectly satisfied with, and there's no showing that it's not working for them.
We said we'd give it to private insurers and we'd give them a bonus of $1.15 for every dollar in their normal plan.
And it turns out that people aren't healthier because of that extra $15 -- or 15 cents. It's estimated that it's costing us about $180 billion over 10 years. Let's say $18 billion a year.
And essentially what my proposal would do and what the House and Senate proposals would do would say, instead of having the insurance companies get that money, let's take that money -- the savings are between $400 billion and $500 billion a year -- and let's devote some of that money to closing the doughnut hole, which has already been talked about. Seniors who need more prescription drugs than their -- than Medicare currently is willing to pay for hit this gap where suddenly they've got to use it out of pocket, and they just stop taking the drugs or break them in half, or what have you.
Let's fill that. That costs around $30 billion a year, or $300 billion. And, you know, let's make some other changes that would result in, actually, the 80 percent of seniors who aren't in Medicare Advantage getting a better deal.
So the -- we can address some of the broader issues, but I just want to focus on Medicare Advantage because I haven't seen an independent analyst look at this and say seniors are healthier for it or taxpayers are better off for it.
That's what we're talking about reforming. We're not talking about cutting benefits of -- under the Medicare program as is required under law. What we're talking about is Medicare Advantage.
And, you know, it may be that some people here think that it's working. I know that there are some Republicans who are sitting at this table who don't think it's working.
You can argue and say, OK, let's not do Medicare Advantage and let's not close the doughnut hole, for example, or, you know, there may be other ways you want to spend that money.
But I just want to establish whether we've got some agreement that the Medicare Advantage program, which is what we are proposing to reform, is actually not a good deal to taxpayers or for seniors and certainly not a good deal for the 80 percent of seniors who aren't in Medicare Advantage. Because, by the way, they're paying an extra premium of about 90 bucks (ph) a year to subsidize the 20 percent who are in Medicare Advantage.