We HAVE Gotten the Message
May 26th, 2011 | 23 responses
Karl Rove thinks Republicans need a more “populist” narrative on Medicare (emphasis is mine):
A good starting point is Mr. Ryan’s message from his speech at the Economic Club of Chicago that his Medicare reform package “makes no changes for those in or near retirement, and offers future generations a strengthened Medicare program they can count on, with guaranteed coverage options, less help for the wealthy, and more help for the poor and the sick.”
The populist note is especially important: When he starts receiving Medicare, Bill Gates should bear a greater share of his health-care costs than the less healthy or less wealthy.
In other words, Republicans need to lie. Not exactly a shocking recommendation from the likes of Karl Rove.
The Ryan plan does not “strengthen” Medicare for “future generations.” The Ryan plan destroys Medicare for future generations by turning it into a voucher program — oh, excuse me, a “defined contribution” plan — that would pay private insurers a fixed amount and make seniors pay for the rest. Ryan touts the “defined contribution” line as if paying the insurance plan directly somehow eases the sick individual’s cost burden more than a voucher sent directly to that individual would. But if the amount the government pays is grossly inadequate to the actual cost of medical care — especially for a population group that tends to have more frequent and severe health issues to begin with — then the burden is not eased.
Even supporters of Ryan’s plan end up making arguments meant to be in its favor that are so transparently dishonest that a fourth-grader could pick them apart. Here is Shawn Tully, at CNN Money, attempting to sound “balanced” while making the plan sound like a winner (emphasis is mine):
The centerpiece of the Ryan manifesto is the radical new math it applies to Medicare benefits. In short, Ryan (R-Wis), chairman of the House Budget Committee, would transform the program for Americans ages 65 and older from an open-ended entitlement that threatens to swamp the budget into a system that makes fixed payments to participants each year — payments that would rise at a predetermined, predictable rate. In concept, it’s similar to the defined contribution plans most Americans now depend on for retirement: The government would provide a set dollar payment towards your health care premium, and you’d cover the balance of your health care costs, just as most Americans need to take extra savings from their paychecks for retirement.But while you can pretty well predict what your 401K will be worth in 30 years if you invest conservatively, the outlook for tomorrow’s Medicare enrollees is far less predictable. The Ryan budget tells us how fast federal spending on Medicare will rise — far more slowly than in the past — but can’t predict how high our medical costs will be 20 years from now, and since the government’s contribution would be capped, how much of those costs we’ll need to pay for ourselves.
In effect, Ryan is asking Americans to make a historic leap of faith. He projects that the newly cost-conscious customers, who’ll inevitably be spending more of their own money, will shop far more carefully for health care. The pressure from those bargain-hunters, and the end to a regime that pays for as many tests as doctors can order, will force physician groups and hospitals to become far more efficient, and offer better prices.
“It’s very speculative how the new system would work,” says Robert Moffitt, a health care policy expert at the conservative Heritage Foundation. “But we know for sure that the Ryan plan would force private providers to compete ferociously for business, and that would introduce a degree of competition into Medicare that’s totally absent today.”
Even without the guffaw-inducing “It’s very speculative… but we know for sure,” it’s hard to take the Heritage Foundation and its adherents seriously on this idea that the “free market” is going to swoop in and save the day for seniors cut off Medicare. Given the fact that the vouchers would be so low relative to the costs involved, it’s much more likely that private insurance companies would drop the senior market altogether than that they would “compete ferociously” to offer policies for the contribution amounts the government would be paying them.
And then there is the other dishonesty that Ryan and his fans are putting out about his plan — that it would work the same way as the health care program that members of Congress and other federal employees get. This is not exactly a lie, but it’s misleading — as the New York Times‘s Economix blog points out:
There is a huge difference in one important aspect between the Medicare program in the Ryan budget plan and the Federal Employee Health Benefit Plan, or F.E.H.B.P., for federal employees and for members of Congress.
Basically, the F.E.H.B.P. is best described as a typical employer-sponsored health insurance plan. The federal government’s – that is, taxpayers’ – annual contribution to the premiums paid to competing private insurers by employees and members of Congress would rise in step with the average premiums charged by the private insurers (see Page 1).
These premiums have been rising over time more or less in step with the overall increase in per-capita health spending in this country.
By contrast, under the Ryan plan, the federal contribution toward the purchase of private health insurance by future Medicare beneficiaries would be indexed only to the Consumer Price Index (see Page 2 of the C.B.O. analysis).
Over the last three decades, the C.P.I. has grown at a much slower rate than per-capita health spending, especially since 2000. …
The problem with the Republicans’ message on the Ryan plan is that people have gotten it:
That support is eroding is not surprising when we consider that initial support was built on the following three pillars:
One pillar was the true believer, a group made up of persons ideologically predisposed to like any program that contains such concepts as vouchers, market forces, and block grants (not to mention tax cuts). I know, because not only is this the obvious constituency but also because there would have been a time that I would have reacted in an automatically positive fashion to all of these buzzwords (I have, however, grown skeptical of their magic over the years in this policy area).
The second pillar was hope. A lot of people were initially hopeful that the Ryan Plan was a truly serious policy prescription that could deal with our most pressing long-term fiscal problem, i.e., Medicare. Of course, the irony that people who made a lot of fun of all things hopey-changey would be so vested in hope-based policy ideas should not be lost. …
The third pillar was courage.* We were told by almost anyone who spoke of the Plan (including the dreaded liberal media) that Ryan’s Plan was “courageous” (or some other superlative). As such, it is hardly surprising that initial responses to the Plan were largely positive. And, I will state, that Ryan does deserve some credit for making an actual policy proposal and I would encourage more attempts in that realm. Fundamentally, it was always going to be the case that the Plan was going to start out at the apex of its popularity and then decline from there. Why? Because the initial press was a combo of hope and courage, with promises of saving to boot. What’s not to like about that? Answer: the actual details of the Plan.
Now, pillar one remains in place.
Pillars two and three, however, are taking serious hits because people are starting to learn more about the Plan’s contents.
There are legitimate questions that call the Plan into question from a policy perspective and there are two key ones. First, the Plan substantially restructures Medicare and changes it from a clearly defined, guaranteed benefit to a more nebulous program. Yes, seniors would be guaranteed a voucher, but they are on their own from there. Second, apart from hope (back to that word) that market forces and state-run (via block grants) programs will lower costs, the Plan does not directly address the health care cost question, which is at the heart of the need to reform Medicare in the first place.
So, in other words, the Plan does not promise the same level of benefit that the current program does and it fails to deal with the cost issue.
Is there any surprise, then, that the Plan’s approval numbers are falling?
And, btw, have I mentioned lately that Medicare is a wildly popular program, amongst Democrats and Republicans? That might be part of the Plan’s trouble as well.
Ya think?
23 Responses to “We HAVE Gotten the Message”
so the Democrats plan is to increase Medicare taxes at a rate higher than GDP growth or higher than CPI growth in order to keep providing entitlements to people.
that means that people’s take home income will continue to delcine due to higher taxes and greater spending.
In addition, the Democrats want to maintain open borders and unlimited immigraiton so that millions of third world immigrants and their relatives can bee added to the entitlement roles.
Please explain how ever increasing taxes is sustainable.
Ryan’s plan may not work but the Democratic Party’s plan is just a method of turning the U.S. into Greece, Spain, or any of the other bankrupt countries in the world.
Yes, SD, we just have to raise taxes 6-8% per year to keep up with rising costs. That won’t poll so well either, but don’t expect Kathy to burden us with a fair look at the issue, nor to contrast Ryan’s plan against her own solutions.
I find plenty of fault with Ryan’s plan, but it’s dramatically more responsible than anything coming from the other side. Pretending that Medicare isn’t in trouble and demonizing people for proposing ways to fix it…Kathy is doing seniors no favors.
Dr J.
Actually Kathy supports the plan where the government keeps lowering the reimbursement for medical procedures so that everyone in medicare either stops accepting Medicare or lowers the pay of everyone who treats Medicare patients.
The left hates the idea that pharmacist and nurses make more money that art history majors and are determined to lower the wages of everyone who works in health care.
Kathy, the GOP is so wedded to fictional narratives at this point, I’m not sure could deal in realities (real numbers and real people) even if they wanted to. Voodoo economics, trickle down, pixie dust, etc. it’s all the same old BS that continues to dog “conservative” economics. Meanwhile, about that class warfare thing… they haven’t figured that out yet either.
Dr. J,
Except the whole point is that Ryan’s plan WON’T fix Medicare. Or, rather, it “fixes” it by eliminating it. Destroying the village in order to save it, you know.
Kathy
JSpencer,
Sometimes it feels to me like a mass psychosis.
Kathy
Yes, Kathy, I was able to glean that that was your point. It is a dishonest one. Ryan proposes spending 4% of GDP on Medicare more or less indefinitely. You can argue that it’s not enough, but it’s a far cry from eliminating the program.
Ryan’s hypothesis is market forces will bend the cost curve and will fix Medicare. I find that plausible, but it could be wrong. Your claim that the plan will fail is just as speculative as anyone else’s, and certainly as speculative as any plan from the left.
Kathy, it does seem sometimes like a sort of collective mental illness, almost a cult-like behavior. When tribal reflexes overpower honesty and logic what else can you call it?
Sharing Costs Is No Way to Fix Medicare
DQ, that’s a legitimate point of view and worthy of discussion.
Anyone who compares health care to some service or product you go out comparison shopping is a freaking idiot. You need medical attn when you need it, at least for the really expensive stuff. When was the last time you were getting services and they even told you the price before handing you a bill long after they’d already done it? Its not the same as shopping for a car, usual market forces don’t apply. If you want to price shop, go get work done in France, Denmark, Canada or Japan. Even if you paid out of pocket, which you wouldn’t have to, the same services would cost a fraction of what they cost here.
And why is that? Because they don’t let the medical industry determine price using “Whatever the market will bear” pricing. That method doesn’t count when you’ve got a bone sticking out of your leg, you’ll pay whatever the hell they charge to fix it in America and they know it. They have attacked the real problem, controlling the out of control price inflation on needed, massively used standard medical procedures and practices. When the voters and party leaders here get that in their sites as a priority we can begin to address the healthcare issue for real. As of now, as usual, the parties have reduced the issue to either taxing the hell out of taxpayers to cover medicine for all or just letting those who can afford it get it, two “solutions” that aren’t going to work.
Both sides twist themselves into illogical pretzels in order to tow the party line. It just so happens that this particular line leads off a cliff. The problem with Reps is that they are more apt to take a running jump with the rest of the sheep than Dems that have a harder time keeping people in line.
“Well it is better than nuttin”, is not exactly a winner argument for a plan that guts Medicare.
The U.S. would be better off is they would stop referring to anything in the future as health insurance. Since there is no management of risk, then whatever it is, it is not insurance.
The problem with the U.S. is that we have all decided that the way to make things affordable is to make other poeple pay for somethng.
Medicare/Mediciad/social security is nothing more than cost transference. Cost Transference programs work in countries with ever growing economies and with growing populations of young people (think the 1950′s). However, when the economy slows down and the population starts aging, cost transference programs quickly become massive failures.
Neither party wants to face the fact that the demographics of the U.S. cannot sustain massive entitlement programs. Both parties are just trying to stick others with the bills.
We’re facing an impossible situation, which can’t be fixed without addressing the underlying cost drivers, something people have been screaming for decades.
I guess we’ll have to wait until it becomes even more obvious.
Slamfu:
Medicare already works the same way most other countries’ systems do, with a big government insurer setting rates of payment for private providers. And we’re seeing much the same outcomes that those countries are: costs are rising, and politicians are scrambling to figure out what to do about it. So what are you proposing that’s new?
Dr. J, based on the reality of the rising cost of health care (the rate at which it increases), and based on what we know from years of experience on the ability of “market forces” to control those costs, much less lower them, that theory is not plausible at all, and not only could be wrong but almost certainly IS wrong.
Kathy
KK:”what we know from years of experience on the ability of “market forces” to control those costs”
—————
With 90% to 95% of payments covered by a third party (“insurance”), there are no real market forces. The lobbyists like it that way.
And this statement demonstrates the ability of market forces to control costs…. how?
Of course, they do. Because the lobbyists work for those insurance companies, which reap huge profits by NOT covering their customers’ health care costs, while charging them premiums as though they did.
Kathy
KK:”And this statement demonstrates the ability of market forces to control costs…. how?”
———————
You’re dissing market forces that don’t exist. The government ruined the market decades ago. That’s a conviction of government interference, not market forces.
I wasn’t aware that the government requires insurance companies to hire armies of people to search for preexisting conditions so they can deny coverage, or rescind policies. How is the government involved in that?
Also, I’m puzzled about all those highly compensated lobbyists whose job it is to FIGHT government interference in the insurance industry. It seems to me that lack of competition would be something private insurers would find beneficial. If it’s the government that’s giving them that lack of competition, why would they be opposing the government’s efforts to give them even less competition?
Kathy
Here is a list of health care cost drivers from some .org website. Idont see anything on this, except for possibly co-oping drug purchasing that bringing more government into is somehow going to reduce the cost.
Take your shots……
High tech is high cost
We’ve come a long way since horse and buggy days, and nowhere is this more apparent than the high tech world of medicine. Major advancements, such as MRIs, are now common procedures, and special operations like fetal surgery and organ transplants are no longer rare. There are many major improvements in health care, but all come with major price tags. Every day there are breakthroughs that allow more lives to be saved, and the quality of other lives to be improved. But we all share in the cost of developing these breakthroughs.
Heroic efforts
In America, we go to extraordinary means to save lives that other countries would let expire. In Britain, for example, the national health care system has denied transplant surgery, blood dialysis and other expensive treatments for patients over a certain age or those who are in very poor health. The “rescue” of premature babies under 27 ounces is routinely attempted in the United States, at a cost of more than $120,000 each. In other countries, those babies would die. Americans will go to heroic means to save lives without regard for the financial cost on society.
Inflation
About one-third of the cost is that dreaded old “I” word: Inflation. Medical care is not immune to it. Across the United States the cost of goods and services is rising as the inflation rate rises to meet higher labor costs, professional fees and operating overhead. The U.S. already spends more than $2.4 trillion a year on health care, as of 2008.
Drug costs
The cost for drugs makes up an ever higher portion of rising health care costs. A recent study of data from the Health Care Financing Administration found that seniors pay twice as much for prescription drugs as they did just eight years ago. Pharmaceutical companies claim they need to charge higher rates for new drugs because of higher research and development investment costs, along with the costs of testing and the approval process.
Fewer hospital admissions
As more people are treated in outpatient settings, hospitals must spread their brick and mortar costs over fewer patients. Hospitals compensate by charging more when you are in the hospital.
Social ills drive up costs
Emergency rooms – one of the most expensive treatment options – report more than a million admissions from assaults every year. Thousands of drug-exposed babies are born every year that require extraordinary high costs. Almost one million teens become pregnant every year. Teenage girls are more likely to have premature births and other complications. All these social problems contribute to higher medical prices across the board.
The government pays a smaller share – and shifting of costs raises your premiums
In recent years, our federal and state governments have shifted billions of dollars in medical costs from Medicare/Medicaid to the private sector. In some cases, the federal government reimburses hospitals and doctors for Medicare and Medicaid, less than 50% of what private insurance pays. However, to make up for the difference, health care providers make up for the government’s underpayment by shifting more of the cost to their billings to private insurance. Cost shifting has been a major cause of higher insurance premiums, particularly in the individual and small business insurance.
Uncompensated care
The cost of providing health care for those who won’t pay, or can’t pay, is rising dramatically. As the number of uninsured people continues to climb, there is a direct increase in the cost of uncompensated care to hospitals, which in turn shift the burden of this “indigent” care cost to those who have private insurance.
The aging population
The cost of treating people over the age of 65 is four times higher than thcost of treating the rest of the population. In the year 2010, the first wave of the nation’s 77 million baby boomers, those born between 1945 and 1965 will begin to retire.
Chronic illnesses
New treatments to help people with chronic illnesses like AIDS and cancer are making a huge difference in helping people to live longer and even defeat their diseases. But the treatments add costs to the insurance system. New drug treatments for AIDS/HIV can add between $10,000 and $20,000 per year per patient.
People sue doctors
Malpractice insurance costs billions for physicians and providers. Unnecessary tests, performed solely to protect doctors from liability add to the exploding costs of “defensive medicine”. The U.S. Office of Technology Assessment in a recent study estimated that about 8% of diagnostic testing is “consciously defensive”. An article on the American Academy of Orthopaedic Surgeons Web site estimates that “defensive medicine costs the U.S health care delivery system about $100-178 billion per year”. Those costs are passed on through higher doctor bills and hospital
Superdestroyer: What we have had for ages is not true insurance, but use of the insurance model for comprehesive, (periodically — monthly) pre-paid medical care.
Add to that the LegaLottO and expectation of perfect miracles always.
KK:”I wasn’t aware that the government requires insurance companies to hire armies of people to search for preexisting conditions so they can deny coverage, or rescind policies. How is the government involved in that?”
————-
Excellent question. Just as politicians can be expected to act in their own best interests, so can companies. If any business denies you what it owes, it subjects itself to lawsuits. However, in the medical field, many states have implemented lawsuit limits under “tort reform”, which for some strange reason, never seems to include any reform. That tilts the equation against the patients. On top of that, ERISA preemption, which was supposed to allow uniform (regular) coverage across states, has been ruled to preempt the ability to sue insurance companies for any reason. Oddly enough, that wouldn’t have even been in there but for McCarran-Ferguson. Each law attempts to get around the results of the previous law, but never removes the source problem.
————————————-
KK:”Also, I’m puzzled about all those highly compensated lobbyists whose job it is to FIGHT government interference in the insurance industry. It seems to me that lack of competition would be something private insurers would find beneficial. If it’s the government that’s giving them that lack of competition, why would they be opposing the government’s efforts to give them even less competition?”
______
Read up on McCarran-Ferguson. They got their exemption from competition a long time ago. And they supported the ACA because it gave them a bigger audience. There’s no deviation here: lobbyists rule.