RyanCare vs. The Public Option
If you want to understand why the budget debate so infuriates people who actually care about deficits — and, in particular, people who actually care about health-care spending — consider this: The central health-care reform in Paul Ryan’s budget, the one that’s got him so many plaudits for courage, would actually increase costs. The health-care reform that progressives have been pursuing for more than two years would cut them. And yet calling for Medicare to be privatized and voucherized is considered serious, while calling for a public option is considered tiresome. But let’s go to the tape.
Back during the health-care reform fight, the Congressional Budget Office looked at the likely effect of adding a public option that paid Medicare rates. “In total, a public plan based on Medicare rates would save $110 billion over 10 years,” the agency concluded. Importantly, the savings would come because premiums would be lower. The basic mechanism here is not complicated: Just as you get better deals by shopping at a mega-retailer like Wal-Mart, you get better deals by working with a mega-insurer like Medicare. Size matters.
As for Ryan’s plan, CBO’s take was just the opposite. “Under the proposal,” they said, “most elderly people would pay more for their health care than they would pay under the current Medicare system.” That is to say, health-care costs go up. Now, federal health-care spending goes down, as seniors are paying 70 percent of their costs out-of-pocket rather than 30 percent. Or, in CBO-ese, Medicare beneficiaries “would bear a much larger share of their health care costs than they would under the current program.” Of course, back in the real world, seniors are going to react poorly to being unable to afford health-care insurance, and those savings won’t manifest.
But even putting that aside, it makes for a very stark contrast. The progressive reform that won’t happen would cut health-care costs. The conservative reform that won’t happen would increase health-care costs. One idea makes insurance cheaper and one makes it more expensive. And yet the idea that makes insurance cheaper is pretty much off the table, while the idea that makes it more expensive — and that almost certainly wouldn’t work — is considered a very serious proposal worthy of brow-furrowing debate.
By: Ezra Klein, The Washington Post, April 25, 2011
Yes, Paul Ryan Does Cut Taxes For The Rich
A number of conservatives have asserted that, contrary to what I’ve written, the House Republican budget written by Paul Ryan does not cut taxes for high earners. (See John McCormack, Ramesh Ponnuru, Charles Krauthammer, and McCormack again quoting Ryan.) Here’s the argument. Ryan keeps overall tax levels the same as they are right now by making the tax cuts permanent. He would then reduce the corporate tax rate and the top income tax rate by ten percentage points, from 35% to 25%. But he would make up for that additional revenue loss by closing “loopholes and deductions,” many of which benefit the rich. Therefore, his plan doesn’t really cut taxes on the rich.
There are four problems with this claim, each of them fatal.
First, the argument simply reflects a legitimate difference in baselines. Under current law, the Bush tax cuts are in full effect, but expire at the end of 2012. Keep Bush-era tax levels in place is not a tax cut compared with the tax code now, but it is a tax cut compared with the tax code in 2013. Which is the true baseline? I think both sides have a point, and Congressional scorekeepers have taken to using both baselines.
When President Obama accuses Ryan of cutting taxes for the rich, he’s using the post-2012 baseline. I consider that the best point of reference because the most important force in our political system is inertia. Given our multiple veto points, it takes great effort to enact a policy change that the parties disagree upon. Ryan proposes to make that change. Therefore, I think it’s fair to describe him as “cutting taxes,” even if revenues did remain at present levels (which I dispute, but more on that later.) I do think there’s merit in both baselines. The argument that Obama is lying about Ryan — that calling him a tax-cutter is, in Krauthammer’s characteristically understated phrasing, “scurrilous” — rests upon the assumption that the current-policy baseline is not only more preferable but the only remotely honest point of reference. That seems like a huge stretch.
Second, even if we accept Ryan’s preferred baseline, his description of his plan is hard to accept at face value. Tax reform is a trade where you take away deductions (that’s hard) and use the money to reduce rates (that’s easy.) The rate reductions are specified. The reduced deductions aren’t. Another way to put this is that Ryan has proposed a specific tax cut that would benefit the affluent, accompanied by utterly vague promises to find offsets. At the very least, the rate-lowering portion ought to carry more weight than the deduction-closing portion.
Third, even if we accept both Ryan’s baseline and assume he will match every dollar in lost revenue from the rate cuts with another dollar in reduced deductions, he will almost certainly wind up cutting taxes for the rich relative even to the post-Bush tax code. Ryan implies that his plan would leave the rich paying the same effective tax rates as they do now because he’s “getting rid of loopholes and deductions, which by the way are enjoyed by the top [tax] rate filers, the people in the top two brackets.” But he hasn’t put out any details. In 1995, House Republicans loudly promised to promote shared sacrifice by rooting out corporate welfare in the tax code. The actual savings they produced turned out to consist of proposals that hurt the poor (by cutting the Earned Income Tax Credit), benefited business (by letting them swipe funds from employee pensions, keeping the money as profit and thus increasing corporate tax revenue), or other reverse-Robin Hood measures.
Now, Ryan was not around then. But we can get a measure of his intentions from the more specific tax plan laid out in his “Roadmap” from 2010. That plan constituted a massive tax cut for the rich, combined with a tax hike on the middle class.
The Tax Policy Center examined various proposals to reduce tax deductions while using the revenue to lower rates across the board. All the plans decreased the tax burden for the top-earning 1%. The problem is that tax deductions are just not worth as much to very rich people as low tax rates.
It’s true that the Bowles-Simpson deficit reduction plan includes proposals that would lower rates to around 25% while increasing the effective tax rate paid by the very rich. To do that, you have to do things like raise the estate tax rate and completely eliminate the preferential treatment of capital gains. But Ryan’s budget promises instead — and this is the only specific policy commitment in its tax section, other than lowering rates — to expand the preferential treatment of income from wealth:
Raising taxes on capital is another idea that purports to affect the wealthy but actually hurts all participants in the economy. Mainstream economics, not to mention common sense, teaches that raising taxes on any activity generally results in less of it. Economics and common sense also teach that the size of a nation’s capital stock – the pool of saved money available for investment and job creation – has an effect on employment, productivity, and wages. Tax reform should promote savings and investment because more savings and more investment mean a larger stock of capital available for job creation. That means more jobs, more productivity, and higher wages for all American workers.
Fourth — almost there! — even if you reject everything I’ve written to this point, Ryan’s plan includes the repeal of all the taxes in the Affordable Care Act, including the taxes on the affluent. Here’s the Path to Prosperity’s description of health care taxes he proposes to undo:
The new law imposes a 0.9 percent surtax on wages and a 3.8 percent surtax on interest, dividends, and capital gains. Both taxes only apply to filers in the top two income brackets, but as discussed elsewhere in this section, those filers include small businesses employing millions of Americans, and the new taxes on capital will reduce the pool of capital available for investment and job creation.
There. Per Paul Ryan, these are upper-bracket taxes he proposes to lower. He could keep those taxes in effect, and cover a few of the uninsured people he throws off their coverage, or make the progressively-more-inadequate health care vouchers he uses to replace Medicare slightly less inadequate. But he chooses not to do that, because he believes it’s more important to tax capital at lower rates. It’s fine for him to believe that. But he and his defenders have to stop insisting that he doesn’t propose tax cuts for the rich. He indisputably does so.
By: Jonathan Chait, The New Republic, April 20, 2011
Remember The Health-Care Reform Debate?: How The Landscape Has Changed
As a participant in the great health-care wars of 2010, it’s been — I don’t know: Amusing? Depressing? Annoying? Vindicating? — to watch Rep. Paul Ryan’s budget run over every principle or concern that Republicans considered so life-or-death a mere 400 days ago. A partial list:
Big changes need to be bipartisan changes. “The only bipartisanship we’ve seen on [the health-care] bill is in opposition to it,” said Eric Cantor, now the House majority leader. “When the stakes are this high – reforming 20 percent of the U.S. economy – there must be constructive conversations and negotiations from Republicans and Democrats in both houses of Congress,” wroteformer representative Tom Davis. The Ryan budget, which is unquestionably a more ambitious document than the Affordable Care Act, passed the House with no Democratic votes and four Republicans voting no. The only thing bipartisan was the opposition, etc. This appears to have given no Republicans anywhere any pause.
Polls matter. In March 2010, John Boehner was very, very upset that Democrats were working to pass a health-care law that a slight plurality opposed in polls. “President Obama made clear he is willing to say and do anything to defy the will of the people and force his job-killing health care plan through Congress,” he thundered. Last week, Speaker Boehner and the Republicans passed Ryan’s budget. How do its elements poll? Much, much worsethan the Affordable Care Act.
The Affordable Care Act’s Medicare cuts will devastate hospitals! Last fall, Ryan’s health-policy guru was saying,“The official Medicare actuaries have determined that approximately 15 percent of hospitals will be driven out of business in less than ten years if these cuts go through and called the cuts ‘clearly unworkable and almost certain to be overridden by Congress.’” Now those same cuts are in Ryan’s budget. C’est la vie, I guess (that’s French for “only Democratic cuts hurt hospitals”).
The Affordable Care Act’s savings don’t begin quickly enough! When the tax on expensive employer-provided insurance plans was pushed back to 2018, conservatives were outraged. “The odds are high that the excise tax will never actually happen,” wrote David Brooks. “There is no reason to think that the Congress of 2018 will be any braver than the Congress of today.” It was a fair argument: Cost savings that begin in the future are less certain than cost savings that begin now. So when does, say, Ryan’s voucherization of Medicare begin? Not 2012. And no, it’s not 2018. It’s 2022.
There’s no reform in the Affordable Care Act. “It would take Sherlock Holmes armed with the latest GPS technology and a pack of bloodhounds to find ‘reform’ in the $2.5 trillion version of the health-care bill we are supposed to vote on in the next few days,” then-Sen. Judd Gregg wrote. But apparently Holmes got his iPhone out, because now the Affordable Care Act is chock-full of reforms. In fact, it’s the model Republicans are following. “It’s exactly like Obamacare,” Sen. John Cornyn saidof the Ryan plan. “It is. It’s exactly like it.” And he meant that as a compliment!
The Congressional Budget Office will score anything you tell it to. “Garbage in, garbage out,” Sen. John McCain said. “Can you really rely on the numbers that the Congressional Budget Office comes out with?” asked Fox’s Steve Doocy. Now, of course, Republicans are touting CBO’s estimates of Ryan’s savings.
First, “do no harm.” That was former Republican National Committee Chairman Michael Steele’s big applause line. “Republicans want reform that should, first, do no harm, especially to our seniors,” he wrote in The Washington Post. Cantor said the Affordable Care Act would “cut Medicare for our seniors and increase premiums for many Virginians.” Say what you will about Ryan’s budget, but going from paying 25-30 percent of your Medicare costs to 70 percent cuts your Medicare while increasing your premiums. Steele also said that “we need to protect Medicare and not cut it in the name of ‘health-insurance reform.’ ” Instead, it’s getting cut in the name of tax cuts. To be fair, Ramesh Ponnuru saw this one coming, so I can’t say conservatives were denying it at the time.
I’m sure I’ve forgotten a couple, but that’s what the comment section is for. The natural next question is whether Democrats have been similarly hypocritical in their opposition to Ryan’s plan. So far as I can tell, we’ve not seen it: Democrats think the plan puts too much of a burden on the backs of seniors and the poor — two things they worried about constantly during the Affordable Care Act — and cuts too many taxes for the rich. They also note that the Congressional Budget Office says privatizing Medicare will make it more expensive — the same finding that led to liberal advocacy for a public option. But if I’m missing something here, I imagine it, too, will come up in comments.
By: Ezra Klein, The Washington Post, April 21, 2011
Seniors, Are You Paying Attention To Paul Ryan’s Medicare Plan?
Tea Party members who railed against health care reform because of the spin they were sold about how “Obamacare” would affect Medicare played a big role in returning the House of Representatives to Republican control.
I’m betting that many of them, if they’re paying attention to what Rep. Paul Ryan (R-Wisconsin), wants to do to the Medicare program, are having some serious buyer’s remorse. If Democrats are wise, they’re already drafting a strategy to remind Medicare beneficiaries, including card-carrying Tea Party members, just how fooled they were into thinking that Republicans were the protectors of the government-run program they hold so dear.
As a speaker at an especially contentious town hall meeting during the summer of 2009, I saw firsthand just how many senior citizens were snookered about how reform legislation would alter Medicare. Shortly after I testified before Congress about how the insurance industry was conducting a behind-the-scenes campaign to influence public opinion about reform, Rep. Bill Pascrell (D-New Jersey) invited me to share my perspective as a former insurance industry insider at his September 3, 2009, town hall meeting at Montclair State University.
More than 1,000 people had crammed into the school’s auditorium, not so much to hear the speakers as to express their opinions. Reform opponents were on one side of the auditorium, and reform advocates were on the other side. I had to shout just to be heard above the insults the groups were hurling at each other. Many of the reform opponents were carrying signs that read, “Hands Off My Medicare!” They clearly had bought the lie that the Democrats planned to dismantle the program.
There was no doubt in my mind that the insurance industry was the original source of that lie. While insurers liked the part of reform that would require all Americans not eligible for Medicare or Medicaid to buy coverage from them, they did not like the provision that would eliminate the overpayments the federal government has been paying private insurers for years to participate in the Medicare Advantage program, which was created when Republicans controlled both chambers of Congress in the late 1990s.
A little history: A provision of the Balanced Budget Act of 1997, written primarily by the insurance industry and backed by House Speaker Newt Gingrich and Senate Majority Leader Trent Lott, gave Medicare beneficiaries the option of getting their benefits through private insurers. Republicans envisioned this as the first step toward the total privatization of Medicare.
The Insurance Industry’s Government Favor
The problem was that insurers were reluctant to jump in unless they could be assured of a substantial profit. To get them to market Medicare Advantage plans, the government agreed to give them a big bonus. As a result, we the taxpayers now pay private insurers 14 percent more than the per-patient cost of the traditional Medicare program. These overpayments have contributed significantly to the record profits insurance companies have been posting in recent years, even though only 22 percent of people eligible for Medicare have bought what they’re selling.
The insurers were not able to keep the Democrat-controlled Congress of 2010 from eliminating those bonuses when they passed the Affordable Care Act. The law will indeed reduce future Medicare spending — not benefits — by an estimated $500 million over the next 10 years in a variety of ways, one of which is to stop overpaying insurers. This means that they will not get an extra $136 billion that they — and their shareholders — had been counting on, and they’re really bummed about that.
Knowing they fare much better when the GOP is running things on Capitol Hill, they devoted millions of the premium dollars we paid them to help elect more Republicans to Congress.
An Insurer-Funded Misinformation Campaign
The insurers funneled millions of dollars to their business allies and front groups in an effort to convince the American public that the Democrats wanted to cut Medicare benefits. Not only is that not true, but the new law actually adds an important new benefit and greatly improves another. For the first time, Medicare now pays for preventive care. And the law closes the hated “doughnut hole” in the Medicare prescription drug program.
But thanks to the success of the insurer-funded misinformation campaign, many seniors went to the polls last November convinced that the Democrats not only had created death panels in the Medicare program, they had also slashed their benefits.
The insurance industry funneled $86 million to the U.S. Chamber of Commerce to pay for TV ads that charged that the new law would “cut Medicare.” Also joining in on the campaign of lies was the 60 Plus Association, a group that, according to the Washington Post, AARP and other sources, has received the lion’s share of its funding over the years from the pharmaceutical industry and other special interests.
The 60 Plus Association ran TV ads in numerous congressional districts last fall against Democrats who had voted for the reform law. The ads were amazingly effective. Most of the Democrats they targeted lost.
The irony, of course, is that the GOP had no intention of preserving Medicare as seniors have known it since it was created more than 45 years ago. Ryan’s plan to reduce the deficit — which was approved by the House last week — would complete the privatization of Medicare that insurers and their Republican allies have been plotting for years.
The Republican Effort to Kill Medicare: a Losing Proposition
Ryan wants to give Medicare beneficiaries a voucher they can use to get coverage from a private insurance company. Initially, the vouchers would enable beneficiaries to get coverage comparable to what they have today. But the value of the vouchers would diminish over time. The Congressional Budget Office predicts that 65-year-olds would be paying 68 percent of their Medicare coverage costs by 2030, compared with 25 percent today.
What this means is that almost all Medicare beneficiaries would eventually be woefully underinsured, just as an estimated 25 million younger Americans already are and just as most of the nation’s elderly — the ones who could afford coverage at all — were before Medicare was enacted in 1965. (Most senior citizens had no health coverage before Medicare because insurance companies refused to sell it to them. That’s why it was so urgently needed.)
Ryan’s plan is a losing proposition for just about every American who lives long enough to qualify for Medicare benefits, but it is the business model that insurance firms have been dreaming of for years. It would enable them to reap profits that would make their earnings today pale by comparison.
If Democrats have any hope of keeping control of the Senate and regaining the House, they better be able to explain what’s really going on in ways that even the Tea Party seniors will understand. If I were a Democratic strategist, I would be ordering enough “Hands Off My Medicare” signs to blanket the country.
By: Wendell Potter, Center for Media and Democracy, April 18, 2011
Remember When The GOP Hated Medicare Cuts?
You’ve seen hypocrisy in politics before. But rarely have you seen the brazen kind Republicans just showed on the House floor, when they voted for Budget Chairman Paul Ryan’s “Path to Prosperity.”
Ryan’s budget calls for repealing most of the Affordable Care Act, including both the insurance coverage expansions and creation of an independent board to help restrain Medicare costs. But it would leave in place the rest of the planned reductions in Medicare spending, at least for the next ten years. Among those cuts are $136 billion in reductions to Medicare Advantage plans.
As you may know, Medicare Advantage plans are the private insurance alternative, already in existence, for seniors who prefer to opt out of the traditional, government-run insurance plan. About a quarter of all seniors now use them. The government pays insurers a fee for every senior who enrolls, but studies have shown the government is paying too much. That’s how supporters of the Affordable Care Act have justified the $136 billion reduction.
Throughout the health care debate, Republicans not only rejected these and other arguments for Medicare cuts. They made the cuts a centerpiece of their attacks on Democrats, as the Associated Press noted recently:
“The new law’s massive Medicare cuts will fall squarely on the backs of seniors, millions of whom will be forced off their current Medicare coverage,” the GOP wrote in their Pledge to America, an election-season manifesto. …
In addition to the Pledge to America, House Speaker John Boehner, House Majority Leader Eric Cantor and individual Republican candidates all criticized the cuts.
The National Republican Congressional Committee featured them in ads attacking Democrats in numerous campaign commercials, and some individual candidates made use of the cuts as well.
Ryan and his supporters claim the Medicare reductions in the new Republican budget are different, because Democrats used their cuts to finance more government spending. And that’s partially true. Although Democrats bolstered Medicare drug coverage and arguably put in place policies that will lead to higher quality care, they used the bulk of the saved Medicare money to offset the cost of subsidizing insurance for working-age Americans.
But, by the same logic, Republicans are also diverting most of the Medicare Advantage money away from Medicare. They’re using that money to underwrite the cost of tax cuts for the wealthy.
So Democrats are cutting Medicare to make sure everybody has health insurance, while Republicans are cutting Medicare to make sure millionaires have tax cuts. This is really an argument the Republicans want to make?
By: Jonathan Cohn, The New Republic, April 15, 2011
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