Wyden-Ryan Medicare plan is complicated and Fascinating

By Matt Miller / Special to The Washington Post

Published: December 17. 2011 4:00AM PST

The new Wyden-Ryan Medicare framework is the most fascinating policy and political maneuver of the year. Here’s why.

First, Rep. Paul Ryan’s original Medicare plan was to be the centerpiece of the Democrats’ 2012 campaign, featuring all the predictable cries that the GOP is tossing Grandma off a cliff. By making sufficient adjustments to his plan to draw the cooperation of Sen. Ron Wyden of Oregon, Ryan has plausibly inoculated his party against a full-frontal Medicare campaign. Or at least he gives Republicans a credible rebuttal. After all, Wyden got into politics as the founder of the Oregon chapter of the Gray Panthers. The man has been a champion of seniors for 35 years. If he’s standing with Ryan on Medicare, how evil can Ryan (and the GOP) be?

For Wyden’s part, he has bravely chosen to incur the wrath of his fellow Democrats for having blunted their demagogic spear. But he’s right to do so because, if handled right, premium support may well be part of the answer to Medicare’s long-term woes. Wyden has always been one of the few senators focused on big, creative, bipartisan solutions; the Wyden-Bennett bill, for instance, would have moved us sanely beyond our archaic employer-based health system. It was always the best of the health-reform plans offered.

In this new plan, Wyden gets Ryan to sign on to a key component of that earlier reform, although it has nothing to do with Medicare. Wyden-Ryan would allow firms with fewer than 100 employees the option of giving their workers (on a tax-advantaged basis) the cash the firms would have spent on their health coverage; with this, employees can buy, voucher-style, other policies. Because most small firms offer just one health plan, this is a huge victory for choice. It means that as many as a third of U.S. workers could use the new health care exchanges — a fantastic expansion of access that was perversely killed by both big business and big labor in the Affordable Care Act endgame.

With this new plan, Ryan has signed on to the idea of subsidizing people to buy coverage from well-regulated health exchanges that must take all comers and charge them similar premiums regardless of health status (provisions that did not exist in Ryan’s previous plan). If that framework sounds familiar, it should — it basically describes the dreaded Obamacare!

And here’s the kicker: Wyden-Ryan has a public option to boot, because fee-for-service Medicare would remain an option for seniors. Ryan is thus now on record for the Affordable Care Act model, more generously funded than was his previous plan, with a public option. But just for seniors. Oh, and for workers at small firms, accounting for a third of America’s total employment. Paul Ryan is so close to universal coverage he can almost taste it!

There’s still more. The arcane yet crucial change from Ryan’s previous model is that the annual growth rate for vouchers would be based on nominal gross domestic product plus 1 percent. In his original plan, it increased yearly only by the rate of inflation, which is much less, especially when compounded over time.

Ryan’s early, stingier voucher trajectory led my old boss, Alice Rivlin, to walk away from the plan she’d worked on with him and led directly to the Congressional Budget Office’s assessment that Ryan’s plan would shift massive costs to seniors over time. But Ryan chose that path for a specific political reason: Given that tax increases were off the table in his budget as a matter of ideology, it was the only way to show enough long-run budget savings so he could claim his plan would balance the budget by 2035.

But here’s the delicious part. Follow the bouncing ball: Ryan went lean because he needed to show budget balance at some point (even a ridiculous 24 years from now). And because he dishonestly pretended we don’t need to raise taxes as baby boomers retire, he had to get all his savings from Medicare. Now that Ryan has partnered with Wyden and gained political cover on Medicare, his long-term budget — updated with this new framework — will never balance at all. In fact, my guess is this plan adds $50 trillion to the national debt by midcentury. I assume Ryan will still try to play a double game — getting the Medicare cover from Wyden that his party craves while pretending his overall budget plans solve the problem.

But the jig is up. Wyden has put Ryan in a box where he can be forced to admit that there’s no way to get our long-term fiscal house in order without higher taxes as boomers age. (I know it must seem crazy to get excited about forcing a politician to admit the obvious, but that’s the kind of breathtaking intellectual dishonesty on taxes we’ve been dealing with).

If the media are smart and persistent enough to force this question of Ryan’s endless debt, Wyden will have set in motion a Republican “uncle” on taxes that could fundamentally alter policy debate in the years ahead.

It’s complicated but fascinating.

Now if only these guys could come up with a jobs bill ....

— Matt Miller writes a weekly online column for The Washington Post.

You are invited to look at another article:

by Igor Volsky on Dec 16, 2011.

(http://thinkprogress.org/health/2011/12/16/390800/health-care-experts-warn-that-wydenryan-plan-will-end-guaranteed-access-to-care-for-seniors/ )

 

Here are a couple of their points made in the article:

 

1.  The analysts — Urban Institute's Judy Feder, the Center for Budget and Policy Priorities’ Paul Van de Water, and Brookings’ Henry Aaron — will argue, in remarks obtained by ThinkProgress, that shifting beneficiaries from Medicare to a series of private health insurance plans would undermine Medicare’s “guaranteed equitable access to affordable health care” and place seniors care in the untested — and at times untrustworthy — hands of private insurers.

 

2.  While Feder, Van de Water and Aaron share Wyden/Ryan’s goal of reducing health care spending, they argue that there is little evidence to suggest that competition between private insurers could reduce the cost growth and that the existing premium support proposals “lack the regulatory teeth necessary to make premium support even worth considering.”

 

Associated press article by Jonathan J. Cooper, headlined: Sen. Wyden: History of bold health care moves. To read the entire article go to:

http://washingtonexaminer.com/news/2011/12/wyden-has-history-bold-health-care-proposals/2014856

Cooper points out that under the Wyden-Ryan plan, “current beneficiaries and those close to retirement would get to remain on Medicare as it is now” but that those “54 and younger, upon reaching 65 “would have a choice between traditional Medicare and regulated private insurance plans, all competing to lower costs and provide quality care. Seniors would get a fixed amount to spend on a health care plan, no matter which coverage they selected. Lower income, and older, sicker people would get more money.”

I am highly skeptical that the for-profit insurance companies would find as their preferred method to lower costs to be restrictions in coverage as opposed to cuts in salaries of CEO’s, admin and overhead costs, and stockholder dividends. Furthermore. without a great deal of government oversight how do we stop collusion and end up with only the illusion of competition?

My problem is that the republicans are experts at spin. Initially they will deny most of the costs associated with the plan but later when the costs can no longer be denied they will do what they always do: Call for the entire privatization of Medicare and Medicaid, never go for any form of tax increases, and call for draconian cuts in all government programs and agencies (except defense). Even thought Senator Wyden does not think so. I am concerned that at the end of the day this proposed bipartisan fix is a gigantic Trojan Horse, and a band aid at best. I might be able to accept that a band aid is better than nothing, but I want to aim for a more permanent solution. Nevertheless, I may be wrong and your analysis/comments will be appreciated. I will pass them along to DPO and to Senator Wyden's staff.

So a big question is this a distraction or a step in the right direction. Many of us did agree that the Affordable Health Care act was a step in the right direction, and it does contain some of Wyden’s ideas.

Press Release from AFL-CIO President Richard Trumka slams the Ryan-Wyden proposal. Here's a little chunk of the statement:

"The Ryan-Wyden plan betrays a fundamental misdiagnosis of the problem with health care cost growth. We agree that if America fails to bring health care cost growth under control, health care costs will eventually bankrupt families, private businesses, state governments, and the federal government.

It is the height of irony that the Ryan-Wyden plan destabilizes the most effective tool we have to control health care cost growth, which is Medicare.

Under Ryan-Wyden, private for-profit insurance companies will cherry pick the healthiest seniors and stick Medicare with sicker and more costly seniors, driving up costs for Medicare, fragmenting and destabilizing the Medicare risk pool, leaving traditional Medicare to wither on the vine.

In the end, the answer to the problem of health care cost growth is for more people to use Medicare, not fewer. The Ryan-Wyden zombie proposal takes us in exactly the wrong direction."

Chris Lowe writhing in Blue Oregon, ( http://blueoregon.org/2011/12/oregon-progressives-and-dpo-should-repudiate-wyden-ryan-medicare-sell-out/ ) argues that the Wyden-Ryan plan should be repudiated. Among other reasons Lowe repudiates the proposal is that he rejects the notion ( as I do) that insurance markets can control health care costs without harming individual and population health.

Don McCanne, of the Physicians for a National Health Program's wanders "Why is Wyden supporting Ryan's Medicare voucher proposal?". (CTRL click on the statement). This will also give you the joint statement by Senator Wyden and Ryan.

Senator Wyden does urge us to spend more time mulling over the specifics. He believes if we do so we can be more supportive. I am willing to do that and I urge you all to do the same. So this do some effective “mulling”. So I urge you all to go to the source and read senator Wyden’s White paper on the subject at hand: http://budget.house.gov/UploadedFiles/WydenRyan.pdf.