GOP Retreats From Ryan Medicare Plan

May 6th, 2011 at 5:45 pm | 44 Comments |

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That’s all it took for House Republicans to begin to scatter like a covey of quail?

Two simple weeks of recess, viagra complete with ginned-up demonstrations against Medicare and Social Security reform, lead to a full-scale collapse on the fiscal front?

Talk about a great week—President Obama had one.

His order led to the death of Osama bin Laden.  He went to Ground Zero.  He presented two posthumous Medals of Honor. His actions drew praise from former Vice President Dick Cheney and even Rush Limbaugh.

Then at the end of the week, his adversaries on the deficit front—seemingly without external provocation—decided to say that they realized they didn’t have any chance to get Medicare reform as part of a budget package.  That’s just dandy, since Medicare is the primary driver of the unsustainable debt that Republicans pledged to attack last November.

This comes less than a month after House Republicans almost unanimously voted for deep Medicare and Medicaid spending restraint when they voted for the FY12 budget devised by House Budget Committee Chairman Paul Ryan.

House Republicans cannot even claim they didn’t know what was in the Ryan Plan.  Ryan developed the basics of his plan almost two years ago.  He introduced it to almost dead silence and virtually no co-sponsors.  It had been analyzed, criticized and praised for months and months.  So, those who voted for the Ryan Plan knew what they were voting on.  They had to know that it would create a political firestorm.

Well, it did.  And, now, just like on Saturday Night Live in the old days: “Neeeveeer mind.”

My Democratic friends say, “Yep, it’s just like when Pelosi made House Democrats vote for cap and trade in 2009, when everybody knew the Senate would never take it up.  Lots of our guys lost in 2010 on that stupid and useless vote.”

So, is this the GOP’s “cap and trade moment”?  It cannot be called anything other than self-immolation.

No one has been able to explain the seemingly off-the –cuff remarks by House Majority Leader Eric Cantor two nights ago, when he allegedly said, “well we know we won’t get real Medicare reform.”  No one has been able to explain why Ryan himself appeared to agree with Cantor when he said, “We’ll have to settle for singles and doubles, no home runs” in the fiscal battle.

And, the coup de grace, House Ways and Means Chairman Dave Camp put the legislative face on it when he said, “I am not interested in laying down more markers.  I am interested in solutions.”  And with that, Chairman Camp, whose committee has jurisdiction over Medicare in the House, made official what the Republican message mess had revealed—Medicare is “off the budget table.”

What if the House leadership had said, “Yep, we know we have a lot of work to do to convince voters that we have to do real Medicare and Medicaid change if we are to save the nation from bankruptcy, but that’s what we were sent here to do…”?  Eventually, through negotiation, President Obama would have agreed to some changes in Medicare and Medicaid.  That would have given cover to House Republicans in 2012.

As it is now, this unilateral disarmament exposes them on two fronts—they won’t be able to run away from the vote for the Ryan budget (see Sen. Chuck Schumer’s comments in the New York Times story by Jackie Calmes) and they won’t get deficits down significantly.

Am I wrong, or do I remember so many House Republicans saying, “we are not going to be corrupted by Washington, D.C.  We are going to do the right thing, even if it costs us re-election.”?

It doesn’t take much of a seer to forecast an ironic outcome—the FY12 budget that will eventually emerge will have freezes on domestic and defense discretionary spending, some kind of budget enforcement process, and no or very few tax changes.  In other words, just about the same deficit and debt numbers that President Obama had in his FY12 budget submission two months ago.

We will see a repeat of the Continuing Resolution follies, this time on the FY12 budget, some sort of deal to extend the debt ceiling, and not much else.

So, the much-jeered appraisal by Standard and Poor’s last month—when it said that it expected nothing significant on the debt stabilization front until 2013—will become a reality.  And the revolution of November, 2010, turns out to be something less than the rebels promised.

Lord knows what will happen when this crew comes back from the next recess.

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44 Comments so far ↓

  • TerryF98

    A decent analysis apart from this.

    “complete with ginned-up demonstrations against Medicare and Social Security reform, lead to a full-scale collapse on the fiscal front?”

    First they were not “ginned up” second they were against the cuts to Medicare only to give that money to the rich in tax cuts. This is what caused the uproar, and no wonder.

    The GOP has shot itself in the foot, the hand, the head and body. Suckers.

  • Nanotek

    no longer a cause?

  • Rob_654

    It is really too bad that the Republicans made politics out of Health Care Reform and started scaring the hell out of people with their “Death Panel” talk – they really missed an opportunity work with Democrats to come up with a REAL strategy for health care reform.

    • balconesfault

      Rob – that’s EXACTLY what I was saying back then. Whenever Republicans whine about how X or Y or Z wasn’t included in the HCR bill, I point out that there’s a very good chance it could have been … had the GOP been willing to actually support the bill had those provisions been included.

      Baucus kept his Committee going for months after there were 5 other Senate HCR bills out of other committees, simply to get some Republicans who would agree to vote for the bill. Snowe came the closest, at least voting to pass it out of committee once a public option had been stripped, but then even she voted to filibuster almost the identical bill when it came to the Senate floor.

      I will be the first to agree that the HCR bill had flaws – and that some of the objectionable crap was put in there because not all Dems are as free of the influences of the Insurance lobby as I’d like them to be, but with the GOP in lockstep they had to be [del]bought[/del] brought aboard.

  • LFC

    [blockquote]Two simple weeks of recess, complete with ginned-up demonstrations against Medicare and Social Security reform, lead to a full-scale collapse on the fiscal front?

    If by “reform” you actually mean “dismantling and destruction”, I understand what you’re saying. Good thing I got my copy of the New Republican to English Dictionary!

    I do find it amazing that the author can’t understand that dismantling two of the most popular (very successful) programs in the entire country in trade for tax cuts going exclusively to a minority of high income people managed to piss people off. The people who want to keep Medicare and Social Security from being totally destroyed are pissed at the Republicans’ “plan”. The people who want to cut the deficit at all costs are pissed at the Republicans’ “plan”.

    The only people that are really gung-ho for it are those who don’t need Medicare or Social Security and who’ll also happen to be the people who get the additional tax breaks. That’s not a large number of people.

  • Frumplestiltskin

    what, you mean telling people under the age of 55 that they had to have spent a lifetime of paying Medicare taxes that they will then be forced at their own retirement to take crummy vouchers which will not keep pace with the rate of Medical inflation just so the wealthy can have massive tax cuts is NOT a political winner? Who could have thought that?

    When Ryan’s plan was ignored I thought the Republican party was sane, lord knows why they voted on something that only the rich could support. Shifting the spending burden onto seniors will not lower costs, unless it is your desire that they just eff off and die.
    I am for reasonable Medicare reforms, and the ACA has a number of them, as well as increasing co-pays for seniors (with some means testing exemptions for poor or chronically ill), as well as some tort reform and sensible rationing but these are things we have to do in a bi-partisan fashion.

    The Ryan plan has no chance in hell of happening. It is the same with Democrats who screamed for single payer. The Democrats had the sense to take what they could get, the Republicans went for broke and went broke.

  • mickster99

    Laughing at this post:”Medicare reform” is republicanSpeak for the elimination of Medicare.

    The Republicans may finally be realizing that Fox talking heads and Teabaggers are more representative of the fringe and are certainly not mainstream. Despite their numbers in the House.

    They will soon discover how popular their tax cuts for corporations and the wealthy are. If they but have ears to hear and eyes to see.

    So much for ideologues.

  • chicago_guy

    So…is Paul Ryan dry yet? Seems he’s been hanging out there for a day or two…

    The party regulars can read and comprehend (despite occasional evidence to the contrary), and they can read polls as well as anyone. Very few Americans want Medicare turned into a voucher program, because if there’s anyone they trust less than the federal government, it’s the private insurance industry. The feds might be incompetent, at times, but at least they’re not cynically bloodthirsty in the ways that American corporations are.

    • balconesfault

      Very few Americans want Medicare turned into a voucher program, because if there’s anyone they trust less than the federal government, it’s the private insurance industry.

      Yep – which is why the Insurance Lobby went to the mat to block a public option.

      Had people been given the choice of buying into Social Security, the insurance industry would have lost billions in revenues within a couple years.

  • Saladdin

    You can’t frighten voters for 1 1/2 yrs with HCR fomenting govt distrust, then turn around and expect people to trust you.

  • ram6968

    just an observation…from what I’ve seen of the teabaggers, they’re not that sharp and not all that rich….it’ll be interesting to see how they like losing their medicare come election time in regards to those they voted in…afterall…they were the ones yelling keep your hands off my medicare

  • shediac

    Republicans are terrified of Rush Limbaugh. Limbaugh set the goals for the party to make Obama fail. The heck with the citizens of The USA the goal set by Limbaugh was to make Obama fail. There isn’t one Republican member of government who would dare upset Rush.

  • hisgirlfriday

    My Democratic friends say, “Yep, it’s just like when Pelosi made House Democrats vote for cap and trade in 2009, when everybody knew the Senate would never take it up. Lots of our guys lost in 2010 on that stupid and useless vote.”

    Your Democratic friends are wrong in comparing Pelosi’s questionable leadership on cap and trade to the unconscionably embarrassing bungling of the House GOP on Medicare.

    When Pelosi pushed forward on cap and trade in the House it was certainly a tough tough slog, but at least she did so with her party with a filibuster-proof majority in the Senate and a president of her own party in office. Also, not long before the time she pushed it through and liberals in Congress identified it as a priority, Republicans hadn’t even yet so unitedly and ferociously opposed cap and trade the way they do now (as evidenced by Pawlenty’s embarrassing flip-flop laid bare for all at the GOP debate last night). And just like Pawlenty, Republicans didn’t oppose cap and trade on principal or policy. They did so for politics.

    Furthermore, cap and trade/climate change nowhere near moves voters the way that things like Medicare/Medicaid/Social Security do. And nothing unites the Democrats MORE than their belief in the worth and sanctity of programs like Medicare/Medicaid/Social Security. Not even collective bargaining rights is as important, although that’s a good way to rally Democrats too.

    Does anyone really think the majority of independents who switched from the Democrats to the GOP and removed Pelosi as Speaker were doing so over fears of a Democratic Congress implementing cap and trade and believing in climate change science in the 2010 mid-terms? No way! It was over Obamacare’s Medicare cuts and the death panels scare campaign driving all the senior citizens/near-retirement baby boomers away from Obama.

    Now how does the GOP even punish Obama for Obamacare in 2012 when they themselves are pushing to reform Medicare in radical ways?

    They were against Medicare cuts before they were for Medicare cuts and are against Medicare cuts again?

    This is 1,000 times dumber than Pelosi on cap and trade.

  • armstp

    The GOP will not be able to “Retreat” from the mountain of negative advertising that is going to come their way on the Medicare and the Ryan plan in 2012. They may try and retreat now, but too late, as they voted for it. They cannot put the genie back in the bottle, as they have exposed themselves to what they really believe. They are going to get slaughter, as any retreating army does when the Dem calvary comes charging at them with sword drawn as they run away.

  • maxfieldj

    Harry Reid needs to schedule the vote in the Senate. It is only fitting justice for the Republicans. If the shoe were on the other foot they would not miss an opportunity to embarrass the Democrats. The Ryan plan had many other flaws besides Medicare. Any plan that does not balance the budget until some time in the 2030′s is not a serious attempt. Ditto the Democrats.

    Now would be a good time for both sides to sincerely work together for the good of the country, not their respective parties.

  • Stewardship

    “Am I wrong, or do I remember so many House Republicans saying, “we are not going to be corrupted by Washington, D.C. We are going to do the right thing, even if it costs us re-election.”?”

    Bingo. That’s why nothing serious gets done in DC. Every decision is based on the short term future of the incumbent office holder, not the long term interest of the nation. Why bother teaching about the Founding Fathers who not only put their power, prestige, and influence on the line, but also their lives?

    The whole crew, especially my fellow Republicans, are spineless eunuchs.

  • torourke


    What are you talking about? Do you really think Republicans expected to enact Ryan’s Medicare reform plan in this Congress? With a Democratic Senate and Obama in the White House? Seriously? Not a single Republican thought that such a thing would happen. Read this:

    And the analogy to the cap and trade bill is totally off the mark. Democrats could not get that bill passed even when they controlled the Senate by a filibuster proof majority and had Obama in the White House, which is completely different from where the Republicans find themselves today. And you are seriously going to compare the two efforts? Did you do any thinking at all before you decided to start gloating? I can see none of the commenters did here, but that’s par for the course. Wake up.

  • torourke

    Here’s some more of the same. It helps to know what you’re talking about before you start gloating Steve.

    • ottovbvs

      I’m delighted to hear Republicans are going to die in the last ditch to defend this. We wouldn’t like voters to confused about their intentions would we?

  • indy

    Why is WaPo reporting exactly the opposite of this article?

    Senior Republicans said Friday that they are committed to a controversial overhaul of Medicare and will continue to support it as part of their deficit-reduction plan despite strong White House opposition.

  • sbh

    Perhaps we will finally see American voters grasp the need to rebalance in a better way the two pillars of our national identity, namely representative government and capitalism, into such a dynamic interrelationship that doesn’t gut either of their beneficial attributes. Healthcare will be a perfect catalyst when viewed in the extreme: whom do you want setting the standard for healthcare (currently or in your retirement), government or business, Pelosi or BP, Reid or Walmart, Obama or Wells Fargo……Democrat or Republican.

    The inefficient tender mercies of government make us all crazy if we but keep our eyes open, but to be sure, capitalism will cannibalize itself and its very last customer in order to keep counting its money.

  • ottovbvs

    In other words, just about the same deficit and debt numbers that President Obama had in his FY12 budget submission two months ago.

    Exactly as I forecast. And there was nothing ginned up about the reaction to Ryan’s nonsensical doctrinaire proposal which was destroyed within hours of its appearance (apart from with Very Serious journalists who are clueless). The problem for Republicans is they are now married to this. All but seven I think voted to scrap Medicare and Medicaid.

  • NRA Liberal

    I remember during the healthcare fight, when liberals were complaining about the bagger townhalls being ginned up and all fake astroturf, etc. I always reminded liberals that the organization may have been top down and controlled by Freedomworks, or whoeever, but the political passion it was channeling was very real and liberals ignored that at their peril. Cut to Nov 2010.

    I think conservatives are making the same mistake in reverse and getting high on their own supply, if they think that the populous at large supports their plan to wreck the social safety net because some rich donors and Galtian Occupation Party apparatchiks feel that taxes are too high. Those protests were real and the GOP ignores that at their peril.

  • bamboozer

    Even a casual reading of Ryan’s Road Map should have told the Republicans, foaming freshman or not, that it was a blueprint for public condemnation and a club for the Dems to beat them with. Like good little drones they marched over the cliff anyway. Good going Boehner! Ryan himself will probably survive in his cosy little gerrymandered district, others will not be so lucky and could not deserve it more.

  • Arms Merchant

    Health care costs will continue to spiral out of control as long as Medicare remains a fee-for-service scheme. Patients are disconnected from costs and providers are incentivized to order the maximum number of tests and services to get reimbursed.

    Tax preferences for employer-based benefits completely distort the market and cause additional hardship when people lose their jobs. Obamacare only exacerbated everything that’s wrong with our health care system–mandates, bureaucracy, fee-for-service, lots of wishful thinking, and yes, a bureaucratic “death panel,” the IPAB.

    We’ve taken the whole idea of “insurance” (which is supposed to cover a loss that one can’t handle financially) and turned it into an entitlement, with all the associated corruption and inefficiencies.

    The way to fix it is to reconnect patients with responsibility for the costs of their own care. Vouchers for the poor and for preventive care for everyone (vaccinations, routine checkups) are the right way to go. Everything else should be cash, health savings accounts, and high-deductible catastrophic coverage with no preferences for employers. Costs would plummet.

    • Nanotek

      “Obamacare only exacerbated everything that’s wrong with our health care system–mandates, bureaucracy, fee-for-service…”

      denied access was what was wrong for tens of millions of Americans

      • Arms Merchant

        Walk into any emergency room in the country and 85% of the people there won’t pay and have no intention of paying. Yet they will receive care because the government mandates it. You’re paying for them. Obamacare won’t change that.

        • Nanotek

          “Walk into any emergency room in the country and 85% of the people there won’t pay and have no intention of paying. Yet they will receive care because the government mandates it. You’re paying for them. Obamacare won’t change that.”


  • Frumplestiltskin

    AM: The way to fix it is to reconnect patients with responsibility for the costs of their own care. Vouchers for the poor and for preventive care for everyone (vaccinations, routine checkups) are the right way to go. Everything else should be cash, health savings accounts, and high-deductible catastrophic coverage with no preferences for employers. Costs would plummet.

    Unfortunately you are wrong. Many poor do not even sign up for Schip for their children because it is so complicated, HSA’s are nothing more than a tax shelter for the rich (do you really think people have money to sock away for this instead of normal bills?) high-deductible leads to greater costs as treatable conditions are not treated until they become serious. You also seem to think Americans have the requisite medical knowledge to “comparison” shop. They don’t. The minor stuff isn’t the cost driver, it is the big stuff; cancer, heart disease, etc. and do you really think you are in a position to comparison shop? No, don’t do this…it costs too much, lets save money and go with this? Please.

    • Arms Merchant

      Frump, not only are you incorrect, you are typically condescending to the poor. Ah, yes, a benevolent Government has to look out for people too ignorant and child-like to look after themselves. So you are arguing that this is what the Welfare State has wrought? A dependent class to dumb to make decisions for their own lives (or to take the advice of professionals who would give them different advice than if they had a blank check)?

      Lots of employers, including small businesses, are switching to providing a lump sum every year for HSAs because they understand people make better decisions when it’s their money. Lots of doctors are dropping out of Medicare and giving cash discounts because without the middleman they can save 30-50% of their costs.

      In a few words, you just demonstrated everything wrong with liberalism: its patronizing attitude, its contempt of freedom, and its commitment to ever-higher spending for ever-more “benefits” (i.e., dependency) for ever more people.

      Well, no thanks. I’d rather be free than be your ideal Ward of the State. Your Comfort is not worth my Freedom. Go peddle your fascism somewhere else.

  • sbh

    AM is partially right. Most of us are. There are no retail customers in healthcare….except for me since I dumped my private health insurance when it hit an annnual premium of 18k. Anyone shocked? Anyone? If you are it is because you have little idea what coverage costs because youare not a real helathcare customer. As soon as I started “self-paying” and correcting all the billing errors ( a thing no one does because its not their money and no billing department knows how to process self pay rates) all the bills dropped by 60%. I disagree that HSA are for rich people, I have one and I’v enever made six figures in my life. I also disagree that Americans are capable of making good decisions about their health (as opposed to their healthcare). Americans are fat and feeble, and the poorer they are the more likely they are to be very fat and unhealthy.

    If we actaully spend our own money on healthcare we will make better choices as to procedures, just like with our cars and house repairs. But the Republicans don’t care about choice, not really, as long as that choice is to exclude the single payer option.

  • Rossg

    Unfortunately, my medical knowledge is virtually nil. Therefore, after telling my physician about a problem I am experiencing, at which point he suggests an MRI, I am stuck with deciding if it is worth the cost. This thought process is the same whether I am fully paying for the service out-of-pocket, or through my weekly withholding of insurance premiums. Why would anyone want to endure any kind of medical test just because it is “free” (although they really aren’t).

    The purpose of many tests is to determine, sometimes non-invasively, what may be the precise problem. Doctors are human, and most often do not know the precise problem. Sure, some tests are not needed, but which ones? My medical knowledge simply won’t help me make that decision. I have to have a doctor I can trust with these decisions. A final question: who out there wants a doctor to make a healthcare decision based solely on empirical analysis?

    Medical care is basically one-on-one. Its cost is based upon the cost of providing such service, backed up by the use of some machinery (some of which is cutting edge and, therefore, expensive to acquire).

  • Frumplestiltskin

    well AM, you have your fantasy I will come up with statistics. I am going to post some Cohn as rebuttal and you are certainly free to try to rebut that:
    She’s at it again. The woman who told us that the Clinton health care plan would prohibit doctors from accepting private cash payments (it wouldn’t have) and that the Obama health care plan would “pressure the elderly to end their lives prematurely” (it won’t) has a new op-ed.

    I’m talking about self-proclaimed health care expert Elizabeth McCaughey and she appears today, once again, in the pages of the Wall Street Journal.* Her argument is that the Republican budget won’t keep seniors from getting the health care they need–and that the Affordable Care Act will.

    It’s the kind of upside-down, black-is-white inversion of reality that would be hard to take seriously coming from almost any other source. But, if recent history is a guide, McCaughey’s influence will only grow with her mendacity. Meanwhile, prominent Republicans like Paul Ryan, author of his party’s budget, have already started making portions of these arguments, albeit in less egregious form, on their own. So I want to look at these arguments a bit more carefully, even if it means giving McCaughey the attention she plainly craves but just as plainly does not deserve.

    McCaughey’s argument goes roughly like this: Yes, the Republicans want to take money out of Medicare. But the Affordable Care Act already does that anyway. The difference between the two plans is that the Republicans convert the program into a voucher, unleashing a competitive market that will reduce the cost of medical care, keeping it within reach of seniors. The Affordable Care Act, by contrast, takes management of Medicare away from Congress, giving it to an unelected board of technocrats that will ration care. The elderly will have to wait for treatments or, worse still, have them denied altogether.

    There are some details and twists along the way, and I may get to some of those later on. But that’s really the gist of what she’s arguing. And, like I said, it’s bolder but not wildly different from what many Republicans and their supporters are saying. From the very beginning of the debate over the budget and, really, from the very beginning of the debate over health care reform, GOP leaders have held up their ideas as a consumer-oriented alternative to the supposedly bloodless and mindless central-planning that ended up in the Affordable Care Act. Just yesterday, according to Politico, Ryan defended the budget in a contentious town hall by saying the Affordable Care Act “puts a board in charge of cutting costs in Medicare” and that the board would “automatically put price controls in Medicare” and “diminish the quality of care for seniors.”

    So what aren’t McCaughey, Ryan, and the rest telling you? A lot of things, as usual. But two big misrepresentations stand out.

    First, they would have you believe the difference between their favored plan and the Affordable Care Act is entirely about the form of cost-cutting. It’s vouchers versus government insurance, consumer shopping versus central planning. These are important distinctions and I’ll get to them in a moment, but there’s another, hugely consequential difference between the two approaches: The Republican budget would take much more money away from seniors than the Affordable Care Act would.**

    While McCaughey never acknowledges this, she does make the argument that conservatives often use in defense of these cuts. Competition among plans, she implies, will reduce the cost of health care enough to keep it within the reach of seniors. But I’m aware of no credible evidence in the literature to suggest competition could save enough money to offset the impact of cuts as large as the ones in the Republican budget. The possibility seems even more far-fetched given studies that have shown private insurance is, benefit for benefit, more expensive than public insurance.

    This is why the Congressional Budget Office said unequivocally that the Republican budget would leave seniors with much greater exposure to health care expenses. McCaughey dismisses the CBO analysis as “deceptive” and misinformed. (“Kettle, Black Pot holding on line two…”) But the analysis, and the agency, deserves better than that. CBO is not merely non-partisan. It also makes predictions based on what it considers the midpoint of reasonable expectations. It’s one thing to say (as even I have on occasion) that they have put the midpoint a little too high or low. It’s another to say the range is completely in the wrong place. That’s essentially what McCaughey and some Republicans want you to believe.

    The other misrepresentation in the McCaughey op-ed and, more generally, Republican rhetoric is in their characterization of how the Affordable Care Act controls costs. Ryan’s focus on the “board in charge of cutting costs in Medicare” is a reference to the Independent Payment Advisory Board, or IPAB, which McCaughey discusses at the end of her op-ed. But these critics invest it with far more authority than it really has, even as they distort what it’d actually do.

    The truth is that the Affordable Care Act adopts a slow, multi-faceted approach to controlling the cost of health care. Instead of relying primarily on cuts in assistance for seniors, as the Republican budget would, the Affordable Care Act puts the onus for cost-cutting primarily on the health care industry. Hospitals would see reimbursement rates decline, device makers have to pay an extra tax, and so on. Seniors are part of this “shared sacrifice” too: Retirees enrolled in private Medicare Advantage plans, for examples, may lose some of the extra benefits those plans offer. But it’s primarily the producers and providers of care, rather than beneficiaries, who will bear the brunt of the impact.

    More important, the Affordable Care Act doesn’t simply take money out of Medicare. It does so in ways that are designed to realign the program’s incentives, to reward high quality care and discourage the shoddy kind, so that it becomes possible to spend less money without getting inferior treatment. My favorite example of this, because it’s easiest to explain, is a provision that would reduce payments to hospitals with high rates of inpatient infection. You’d think that McCaughey, who is chairman of a group called the Committee to Reduce Infection Deaths, might appreciate that. In any event, it’s worth noting that smart people on the left and right have long endorsed these sorts of improvements.

    Many of these “payment reforms” will start as pilot projects, because, so far, they’ve only worked on a small scale. And the hope is to replicate the most successful ones nationally. But what if that doesn’t happen? That’s where the IPAB comes in. The law establishes a long-term budget for Medicare, with targets for what the program should cost every year. If Medicare cost exceeds those targets, as CBO thinks is likely at some point in the future, IPAB would make new recommendations to Congress on how to control spending.

    The rationale for IPAB is a belief that doctors, experts, and consumer advocates working together probably have a better feel for calibrating Mediare reimbursements than 535 members of Congress who know more about fundraising than the actual cost of medical goods and services. It’s a sensible impulse that’s frequently won conservative support, most recently from the chairmen of the Bowles-Simpson commission.

    There’s a longer, separate post to be written about exactly what the IPAB could really recommend–and what it couldn’t. I’m going to leave that for later, except to note that, under current law, the board cannot modify actual program benefits. For now, though, the essential thing to remember about the IPAB is that, contrary to McCaughey and the Republicans, Congress retains the final say. It can substitute its own cost-cutting measures or, with a three-fifths vote in the Senate, reject the IPAB proposals outright. Plus Congress always has the ability to amend the Affordable Care Act’s growth targets. (Don’t forget, too, that the board’s members will all be presidential appointees, subject to Senate confirmation.)

    To be very clear, there are reasonable and honest critiques of the IPAB and, more generally, the Affordable Care Act. There are sensible arguments on behalf of making health care more competitive (including some that liberals like me would endorse). And there are sincerely held philosophical objections to universal health care. All of those are worth debating. But those are not the arguments McCaughey and the politicians she supports are making.

    *I’ve mentioned this many times before, but McCaughey’s first articles, during the Clinton health care fight, appeared in the New Republic. We apologized for publishing those long ago. As far as I know, the Wall Street Journal editorial page has never seen fit to correct or apologize for McCaughey’s many egregious and hurtful errors, despite the widespread attention they have received. Perhaps that is why she keeps publishing there.

    “I find it sad that someone with Dr. McCaughey’s background cannot make a more constructive contribution to the already confusing debate on health policy,” says Uwe Reinhardt, the esteemed and consistently fair-minded Princeton University economist. “When it comes to describing the Affordable Care Act, I would judge her a dubious ally of the facts.”

    **Specifically, the Republican budget would allow the value of its Medicare voucher to rise in tandem with the consumer price index, or CPI. The Affordable Care Act would eventually set spending targets for Medicare that kept pace with Gross Domestic Product per capita plus one percentage point, or GDP+1.

    CPI grows more slowly than GDP and, of course, slower still than GDP+1. The effect compounds over time. Throw in the substantial cuts Republicans propose for Medicaid, on which lower-income elderly rely to supplement their Medicare coverage, and projections suggest the gap in federal health care spending between the two approaches will go from about 1 percentage point of GDP in 2022 to between 7 and 9 percentage points of GDP by 2050.

    In total, according to the CBO, federal spending on health programs would be “sharply lower” under the Republican plan than it would be under current law, which includes the effects of the Affordable Care Act.

    • Arms Merchant

      “The rationale for IPAB is a belief that doctors, experts, and consumer advocates working together probably have a better feel for calibrating Mediare reimbursements than 535 members of Congress who know more about fundraising than the actual cost of medical goods and services. “

      But not better than 300,000,000 people making their own decisions about their own health care. That’s the fallacy of the Statist project. Somehow wikis are great because everyone has a put, but the market has to be “adjusted,” and tinkered with, and controlled, and subsidized (just insuring fair competition and a level playing field is never enough), ad nauseum, because we can’t really trust people to make their own economic decisions.

      But even that’s not enough, because you enlightened elites know so much better for people that you must force people to take something they don’t want because it’s so obviously good for them. Perhaps it never occurred to you that you don’t have, and can never have, all the information necessary to make peoples’ decisions for them, even if it were moral for you to do so, which it isn’t.

  • Frumplestiltskin

    AM, as to the notion that health care is a consumer good, frankly you are deranged:
    Conservatives frequently argue that the solution to our health care problems lies in consumer power. If only we could free the system of government interference, consumers would shop more aggressively for medical care, forcing the providers, producers, and third-party payers of such care to compete for the business. The result would be a vibrant market with lower prices, higher quality, or some combination of the two.

    Paul Krugman today points out the fatal flaw in this theory: Medicine isn’t just another consumer good:

    There’s something terribly wrong with the whole notion of patients as “consumers” and health care as simply a financial transaction.

    Medical care, after all, is an area in which crucial decisions–life and death decisions–must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge. Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.

    That’s why we have medical ethics. That’s why doctors have traditionally both been viewed as something special and been expected to behave according to higher standards than the average professional. There’s a reason we have TV series about heroic doctors, while we don’t have TV series about heroic middle managers.

    Conservatives frequently cite the example of Lasik eye surgery, in which an ophthalmologist uses a laser to reshape an flawed cornea, thus eliminating the need for glasses or contact lessons. Lasik is both highly unregulated and, generally, not reimbursed by insurance. It’s the closest thing you’ll find to a market in medicine and, sure enough, the price has come down over the years. But Lasik is hardly representative of medicine as a whole, because the procedure is totally optional. As Liam Yore, who blogs under the name “Movin’ Meat,” notes:

    Health care is generally not a refusable or elective service. By this, I mean that in most cases, the health care costs are driven by medically necessary procedures. You get pneumonia. Your knees wear out. You find a lump in your breast. You notice blood in your stool. Barring the denial/self-neglect approach that some people take, when you develop a medical problem, you need to spend money to remedy it. While the timing of your knee replacement may be elective, whether to do it or not generally is not, if the alternative is being disabled and non-ambulatory. … the demand for medically needed care is not going to be terribly price responsive. When your doctor tells you that you need chemotherapy, you don’t make the decision to proceed based on the cost, but on the need. And the number of recreational colonoscopies performed is actually very low.

    To be clear, again, I think there is some element of truth in the argument conservatives make, particularly when you are talking about shopping for insurance plans as opposed to individual medical services. Even many liberal economists would agree that competition can have some beneficial effect both on the cost and quality of health care. And you can see that thinking behind the Affordable Care Act, which attempts to create a more vibrant market for people buying insurance on their own, so that they can shop intelligently among plans and make the best choice.

    But conservatives take this way too far, apparently oblivious not only to the differences between medicine and regular consumer goods but also the extensive evidence showing that people shopping for medicine frequently make poor choices. Conservatives who want to see more “skin in the game”–i.e., higher out-of-pocket costs, forcing consumers to be more choosy about what treatments they get–also don’t account for the fact that it’s a very small, very sick group of people who generate the bulk of medical costs. Yore explains why that’s a problem:

    You can make 80% of consumers highly price sensitive, but they can only affect a tiny fraction of healthcare spending. And for the generally well, their costs are probably those which are least responsible for the spiraling inflation. They’re not getting $30,000 stents or prolonged ICU stays, or needing complex chronic disease management.

    Conversely, those who are high consumers of health care simply cannot be made more price sensitive, since their costs are probably well beyond what they could pay in any event, and for most are well beyond the limits of even a catastrophic health insurance policy. Once you are told that you need a bypass/chemo/stent/dialysis/NICU etc, etc, etc, the costs are so overwhelming that a consumer cannot possibly pay them out of pocket. Since, by definition, these catastrophic costs are paid by some form of insurance, the consumer cannot have much financial interest in cost containment. For most, when they are confronted with a major or life-threatening illness, their entire focus shifts to survival, and they could care less about the cost. Further, many who are in this sick/expensive category have some diminished capacity with regard to their information gathering and decision-making. I’m thinking particularly of the elderly and those who have had strokes or any one of a multitude of illnesses which impact cognitive function or other functional capacity. These patients struggle with their activities of daily living — getting dressed, bathing, transportation, housing, taking their meds. Their ability (let alone interest) in price-shopping their doctors is minimal to nonexistent, even if they had an economic incentive to do so. Taking someone who has a serious illness and making them have more “skin in the game” would represent a cruel additional hardship, but would be ineffective in creating an economic environment in which consumer behavior brought down spiraling health care costs.

    By the way, Yore knows a thing or two about the subject. He is an emergency room physician and, as he mentions towards the end of his item, he’s recently gained a more personal perspective on the issue:

    As I have blogged, my wife is under treatment for stage IIb breast cancer. We are pretty highly functional and informed consumers, and we actually have the financial resources to pay for more of our care than most would, so if, hypothetically, we had a stronger incentive to seek out more cost effective care we would be in a position to do so.

    So, in our case, would we? No, of course not. My wife’s chemo is going to cost >$100,000. I am sure that we could cut down the cost. Herceptin is pretty expensive–are there less expensive alternatives? Turns out there are not. We spent a lot of money on Neulasta to keep her immune system operational during the intense chemo. Maybe we could have gone without it and just risked neutropenia? Maybe saved some money and used neupogen instead? That would have been quite a risk at minimal savings. Maybe we could have skipped the expensive anti-nausea meds? Not a chance! Chemo is miserable enough that those meds were worth every penny. (not to mention that all these meds might actually be cost-saving in keeping her out of the hospital with complications of chemo.)

    What other options do we have in deciding how we treat the cancer? Radiation is non-negotiable, but maybe we could shop between facilities for the best deal. Of course there may not be much price flexibility on radiotherapy given the huge capital costs required. We will be interviewing half a dozen surgeons to determine who will do the mastectomy and reconstruction, and we are 100% focused on quality in making that choice.

    So, in the end, if we had the proverbial “skin in the game” in making treatment decisions for my wife’s cancer, I doubt it would make one iota of difference in the actual cost, or at very best only a small marginal difference in a very very expensive course of treatment. Bear in mind, we are the perfect test case! I can afford to pay $20,000 or more out of pocket if I need to, and it STILL wouldn’t make a difference. If families with more limited means were obligated to pay the same $10-20K, if would mean financial ruin, or inability to access the lifesaving care, but it wouldn’t allow the invisible hand to guide the market towards cheaper, more efficient care.

    • Arms Merchant

      Frump, I’ve never visited your blog so I was unaware of your struggle. Please accept my most sincere sympathy. My sis went through the breast cancer thing a while back, and you are right, there isn’t much that cost-consciousness can do in those circumstances.

      But you are making my point. Your circumstance is precisely why people need catastrophic coverage, but ought to handle routine care on their own. What you are really arguing for is the best care for everyone with no limits and without regard to cost. Who wouldn’t be in favor of that? Until we have to pay for it. The federal government is suffering now from years of promising “free” goodies, but the bill is coming due soon. It won’t be pretty.

  • Stan

    I realize this thread is going cold, but I need clarification on some basic economics.

    At present, there’s a fairly small market for insurance for the over 65 crowd because of Medicare. Presumably, if Ryan’s plan goes into effect the demand for private insurance will go up because the elderly who are not insured through Medicare will need something to take its place. I seem to remember from my college econ classes that when the demand for a product goes up the price of the product increases until a new equilibrium is established. So wouldn’t the price of private insurance for the elderly increase if Ryan’s plan goes into effect?

    I also seem to recall from a book I read about Walmart (and from common sense) that big buyers pay a smaller unit price for items than small ones. So wouldn’t the termination of Medicare as a buyer of health services and its replacement by dozens of private insurers increase the prices charged by medical suppliers?

    Arms Merchant, do you care to answer?

    • Arms Merchant


      Well, like most things, it depends. Right now, govt sets the rates for Medicare, so the only way for providers to recover their costs is to do more procedures. If there was a large demand for “gold plated policies” (akin to your auto insurance covering gas, oil, tires, and maintenance), then the price of those policies obviously will be high. But if seniors forgo policies with unneeded expensive coverage that’s irrelevant to them (say, obstetrics and delivery care), then why wouldn’t the price go down instead?

      Seems to me you are assuming that demand for services would go up with a voucher system. But senior demand is constant regardless of delivery method. Also, there are dozens of insurers in the system already–seniors simply would be added to those rolls. It’s not apparent that the change would have any affect.

  • Frumplestiltskin

    AM, as to your fanciful notion that I am condescending to the poor, again I rely on actual facts and not pulling opinions out of my ass, as you obviously do. Here are the actual facts from the chief of pediatric cardiology and assistant professor of pediatrics at the University of Massachusetts Medical School(honestly, doesn’t it bother you to talk about something you know nothing about?):

    A thousand people gathered at a California Gucci outlet in the wee morning hours a few weeks ago, eager for Black Friday retail bargains. Seven times as many waited at the doors of the Macy’s flagship store in New York City, and a modern-day shantytown was erected on Thanksgiving night in an Oakland Best Buy parking lot. One can only imagine the frenzy that would have broken out if someone had started handing out high-quality, free health insurance worth as much as a dozen wide-screen televisions.

    And yet the bargain outlets giving away health insurance this season are eerily quiet. As Benjamin Sommers and Arnold Epstein recently reported in the New England Journal of Medicine, 40 percent of people who qualify for free coverage through the government’s Medicaid program don’t sign up. In the worst-performing states, like Oregon, Florida, Georgia, and Texas, more than half the eligible people aren’t enrolled. Using adjusted estimates from the U.S. Census Bureau, tens of millions of Americans don’t take the freebie, and tens of billions of dollars’ worth of coverage are left on the table.

    That’s a huge problem for the architects of health reform, whose central aim is helping the 50 million Americans now without insurance. Much attention has been paid to the “individual mandate” in the landmark bill passed earlier this year, which has now been ruled unconstitutional by a Virginia federal court. But previous experience suggests that provision’s impact on rates would be trivial. The real driver of expanded coverage is a planned extension of free health care to anybody with an income below 133 percent of the poverty line—or 15 million Americans, according to an estimate from the Congressional Budget Office. This entitlement is the biggest new federal giveaway of health care since the creation of Medicare and Medicaid in 1965.

    Unfortunately, people might not show up for the bargains. Consider what happened the last time we tried to give away more health care. In the late 1990s, the State Children’s Health Insurance Program made it easier for children to get Medicaid-style insurance, and by 2002, almost half of all American kids qualified for free coverage. As a result, the number of uninsured dropped from 12 million to 10 million, which was great news. But consider the missed opportunity: Among the 10 million children who still lacked coverage, 60 percent were eligible for free care but never signed up.

    So why on earth would people camp out overnight to buy a discounted toy, while they ignore a windfall like free doctor visits for their kids?

    Some of them may have their priorities wrong, but many don’t. The real problem is that state governments are trying to save money by keeping eligible people off the insurance rolls. In 2007, Health Affairs reported that fully one-third of all eligible but uninsured children had been booted out of Medicaid or SCHIP for no good reason, after being enrolled in the prior year. Some states make people file yearly or twice-yearly applications in order to stay covered, with in-person interviews and demands for a birth certificate. (Imagine being asked to retake your driver’s test twice every year.) Make an error on your paperwork or forget an appointment and your kid automatically loses coverage.

    Why are some states so miserly? Because they have every incentive to trim the rolls. Insuring someone through Medicaid costs around $7,000 per year, and in 2008, the country spent $340 billion on the program. Only about half of that money came from the federal government, with the rest draining from state coffers. (The exact proportion varies from state to state.) Because they’re responsible for up to half the costs, states are given wide latitude to make their own Medicaid policies. That means places like Massachusetts and Pennsylvania are very inclusive and manage to sign up about 80 percent of eligible people for free health care, while cash-strapped states like Arizona—where an actual death panel just decided to deny organ transplants to Medicaid patients—have far more restrictive policies and enroll only half of those who are entitled to free health insurance.

    It’s clear why states might have worked against enrollment in the past, but according to the new law, the federal government will cover almost all the costs of people who are newly eligible for Medicaid. The states won’t be on the hook for the millions of names that might soon be entered in the books, yet they’re fighting the expansion of Medicaid benefits nevertheless. (Fourteen have sued to stop it.) So why are some state governments hell-bent on denying free care to needy people when it will hardly cost them a thing?

    The answer lies in a little discussed provision of the law that aims to simplify enrollment into Medicaid. The law’s architects realized that giving away insurance wouldn’t be enough; they also wanted to force states to deal with the people who were already eligible for free care but had been squeezed out of the system. According to the new rules, you may soon be allowed to sign up for Medicaid via the Web, without any of those repeated in-person interviews. (Some states might start enrolling people into Medicaid automatically, just like how Medicare kicks in when people start collecting Social Security checks.) That’s a problem for states with low enrollment rates now. The federal government may be ready to pay for all the newly eligible people on Medicaid, but the states must cough up half the costs for all the previously eligible people who are added to the rolls under the simplified system.

    Imagine what might happen in Florida. Once the welcome mat of new regulations gets rolled out, 2 million previously eligible but uninsured people could sign up for free coverage. (That would bring the state’s enrollment rates in line with, say, Pennsylvania.) Because those enrollees would get only a partial federal subsidy, Florida may be forced to chip in billions of dollars for the program. That liability terrifies state legislators already coping with drastic budget shortfalls. (Of course, these changes could have been avoided if they’d taken their obligations to the poor more seriously in the past.)

    Without an explicit guarantee that more of these costs will be borne by the federal government, many states will fight tooth-and-nail against Medicaid expansion. They’ll drag their feet on good-faith efforts to increase enrollment. When the dust settles, it’s entirely possible that millions of Americans will remain uninsured. And then we’ll talk about another round of health care reforms.

  • Frumplestiltskin

    Stan, Arms Merchant does not know anything, it should be obvious from his initial posts treating health care like going out and buying a car. There is nothing wrong about not knowing much but I would not open my trap unless I had data to back me up. AM does not because he has only his very miss-informed opinion. I read a lot of health care blogs and books from experts which is why I can readily come up with informed articles by them. I just get so tired of such ignorance so I apologize for quoting experts but as they are experts it makes more sense to outright quote them than do it from memory.

  • balconesfault

    I roundly applaud Frum’s contributions here – although it certainly makes his cheerleading for GOP Congressmen who practiced obstructionism throughout the ACA legislative process somewhat puzzling – but it resonates with a long-standing principle I’ve had with respect to Republicans and liberalism:

    Find me a Republican who embraces some specific progressive cause – and dollars to doughnuts I can root out a place where the cause has specifically touched his/her life.

    Thus, almost every Republican who I’ve met who aggressively supports gay rights has gotten there not out of some larger principle … but because of their relationship (usually familial) with a gay individual who has faced discrimination. Republicans who rail against affirmative action have become staunch supporters of Title IX once they have a teen-age daughter who participates in HS sports. Republicans who are the staunchest opponents of environmental regulations suddenly start spending money on researching and protecting a threatened/endangered species when some corporation wants to set up a quarry or dump or windfarm next to their property, or run a pipeline or transmission line across it via eminent domain.

    And so it comes as no surprise to me that a Republican who mounts a very rational defense of greater government involvement in providing healthcare is one who has experienced firsthand how extraordinary, potentially ruinous healthcare costs are often doled out by fate with no regard to virtue or how well someone has take care of themselves.

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