A road map to saving Medicare

[CatholicGerman]

From Paul Ryan, writing at the Washington Post:

The annual analysis of Medicare’s financial health released by the program’s trustees on Aug. 5 led some Democrats to claim that Medicare’s imminent bankruptcy has been delayed, thanks to the creation of their health entitlement program. Only in Washington could the government raid one entitlement program to finance a brand-new one and still claim that deficits have been reduced and entitlements have been reformed.

The trustees’ report compares the revenue that supports Medicare’s trust funds with the program’s planned expenditures. Last year’s report revealed a $38 trillion shortfall over the next 75 years. This year the shortfall appears to have decreased, but only after the Democrats’ health bill cut $529 billion from Medicare. This apparent improvement was the basis for Democratic celebration – even though the program remains tens of trillions of dollars in the hole…

Put simply, Medicare is on course to collapse. Medicare and interest on the national debt alone will soon overwhelm the federal budget, crowding out all other national priorities. The CBO estimates that Medicare will consume 12 percent of gross domestic product by 2080 (up from 3.6 percent of GDP today), bringing total health entitlement spending to 17 percent of GDP. Exacerbating our unsustainable trajectory, health spending explodes under the Democrats’ health plan – raiding Medicare, expanding Medicaid and creating two entitlements without any clue of how to finance the ones we have now. The economy simply cannot handle such crushing levels of taxation and the borrowing required to finance this spending; the CBO warned last month of a devastating debt crisis within two decades.

Read the article. It’s well-written, by a topic expert, and isn’t limited to gloom-and-doom.

I don’t post all of this stuff to depress you guys, Rather I want to point out that things are going downhill fast, but we still have time to stop it all and reform. If we act soon, we can salvage quite a bit, and keep our country from turning into a bankrupt, declining, backwater. But we need more of a sense of urgency, and a determination to do something drastic.

We just need to do what we gotta do. Step 1: Support politicians like Mr. Ryan who actually give a darn about fixing the problems, and have realistic solutions for doing so.

 

[TheTrueCentrist]

Read the article. It’s well-written, by a topic expert, and isn’t limited to gloom-and-doom.

I don’t post all of this stuff to depress you guys, Rather I want to point out that things are going downhill fast, but we still have time to stop it all and reform. If we act soon, we can salvage quite a bit, and keep our country from turning into a bankrupt, declining, backwater. But we need more of a sense of urgency, and a determination to do something drastic.

We just need to do what we gotta do. Step 1: Support politicians like Mr. Ryan who actually give a darn about fixing the problems, and have realistic solutions for doing so.

True, but the expert also has a obvious conflict of interest. That is, if he did not condemn Democratic positions, he might find himself out of a job. This shows through in some weasel words, such as claiming that savings from Medicare were cuts when that figure also represents improvements in efficiency. Further, the article he himself cited suggests that things are potentially more rosy then he paints them. Lastly, he attempts to confuse the reader with regards to the overall savings picture. Yes, the new entitlement programs cost money. However, the effect of spending that money is reduced costs across the board, including on the money that is already spent.

If you read the CBO’s response to his questions, they tell him that one of his ideas actually adds to the deficit some 200B dollars, and that they cannot make conclusions about the other proposals.

 

[Good_News_1]

isn’t limited to gloom-and-doom.

I found it a little depressing, actually.

we still have time to stop it all and reform.

Who is this “we?”

keep our country from turning into a bankrupt, declining, backwater.

My country is doing about average, maybe a little better than average, although we do have a sticky global recession at the moment. Sorry to hear about yours .

. Step 1: Support politicians like Mr. Ryan who actually give a darn about fixing the problems, and have realistic solutions for doing so.

See, this is where it starts being depressing. Ryan doesn’t particularly care about realistic solutions to problems. He cares about self-promotion. He says his program isn’t radical because:

Far from the claims of “radicalism,” this proposal is based on a key reform from the National Bipartisan Commission on the Future of Medicare, chaired by then-Sen. John Breaux (D-La.). That commission in 1999 recommended “modeling a system on the one Members of Congress use to obtain health care coverage for themselves and their families.”

Yep. I remember that commission. These recommendations never were forwarded to the Congress and the President, because they didn’t have enough votes on the bipartisan committee. This proposal died. It was too controversial.

And he doesn’t seem to be adopting this controversial recommendation. I wonder why not. As I read it - and it’s been a long time - the recommendation was a blend of private insurance, subsidies, and government programs. Ryan is just offering a voucher program. The value of the vouchers in his roadmap is less than the value of medicare benefits, and may not increase to reflect the increase in health insurance premiums.

In other words, he is just offering a lower benefit to seniors, and shifting more of the financial obligation to them rather than the general public. The result is that the poor will be taken care of, because they will have medicaid, and upper income seniors will be able to purchase identical benefits, but those in between will receive less care. Of course, Ryan doesn’t say that. And no where does his article mention vouchers.

Natually, you can save money in medicare by cutting benefits. No one doubts that. And cutting benefits is probably part of the solution. But a major part of the solution is missing: raising more funds for medicare, as is an even more important element: cutting costs in the medical system. In other words, the bipartisan commission had a solution that was too controverisal to get out of committee. Ryan makes that solution even more politically unpalatable, shifts it towards what is commonly thought of as the right, and claims it is a moderate approach. And he doesn’t have the guts to call things by their names: rationing, vouchers, and cutting benefits. He will talk about the free market, because it’s appealing to many to believe that the market is invincible and perfect.

As a part of a solution, Ryan’s vouchers are unobjectionable. But as a complete solution they are politically untenable, and he knows it - and they should be.

Ryan cares about one thing, and it isn’t medicare.

 

[Kadaveri]

These problems are never going to be solved until the US gets some kind of a national health service. The US is the only developed industrial country in the world with a privatised health system, which is why it spends 2/3 times as much on health per capita as comparable countries yet has some of the worst results.

 

[CatholicGerman]

Good News, you are missing the point. At least he’s admitting that there is a sincere and pressing problem that can be fixed with policy changes. He is one of the few politicians currently admitting that. I’m not saying his solution is ideal (I’d prefer a more radical one, of course), but at least he’s starting the discussion. How many other politicians are discussing this in earnest?

How are you going to raise more funds for Medicare? It’s already eating an enormous hole in the budget.

Nice to hear that your country is doing so well. So is one of mine. It’s called Deutschland. My other country, the USA, is doing rather badly right now.

 

[Good_News_1]

At least he’s admitting that there is a sincere and pressing problem that can be fixed with policy changes.

Is there someone who is denying there is a budget shortfall in medicare?

How many other politicians are discussing this in earnest?

He isn’t earnest. I’m not sure if there’s anyone discussing it earnestly right now. It’s August, not a time for seriousness in politics. He’s one more circus act (not that I have anything against circus acts).

How are you going to raise more funds for Medicare?

Tax. Medicare is just like social security, except it is tied up with exploding medical costs. It is easy, as a matter of math, to solve the demographic issue. The health care piece is more troublesome.

My other country, the USA, is doing rather badly right now.

Well, there is a recession, no doubt. Why invest in the belief your country is otherwise doing poorly?

 

[Ocean52680]

True, but the expert also has a obvious conflict of interest. That is, if he did not condemn Democratic positions, he might find himself out of a job. This shows through in some weasel words, such as claiming that savings from Medicare were cuts when that figure also represents improvements in efficiency. Further, the article he himself cited suggests that things are potentially more rosy then he paints them. Lastly, he attempts to confuse the reader with regards to the overall savings picture. Yes, the new entitlement programs cost money. However, the effect of spending that money is reduced costs across the board, including on the money that is already spent.

If you read the CBO’s response to his questions, they tell him that one of his ideas actually adds to the deficit some 200B dollars, and that they cannot make conclusions about the other proposals.

Those who have worked on the Hill know that Mr. Ryan is a straight-forward and honest public servant. Even though most Democrats in public won’t say it, Mr.Ryan’s knowledge of the federal budget, especially his expertise in mandatory spending programs, is highly regarded on BOTH sides of the aisle. I suggest you get your facts straight before attempting to refute Mr. Ryan on Medicare.

Lastly, he attempts to confuse the reader with regards to the overall savings picture. Yes, the new entitlement programs cost money. However, the effect of spending that money is reduced costs across the board, including on the money that is already spent.

This is incorrect. To get a better picture of the true cost of the bill, you need to understand how a bill is scored by CBO. The CBO can only make estimates based on the way legislation is written, including even the most fantastical of assumptions. For starters, PPACA used what budget lingo calls “timing shifts” and other budget gimmicks to hide the real cost of the legislation. PPACA included 10 years of tax increases and 10 years of Medicare cuts to pay for 6 years of spending. So, the estimated $938-billion cost for health care subsidies, which start in 2014, does not reflect a full 10 years of spending. A true 10-year cost estimate, starting when subsidies begin is $2.6 trillion.

Even if you buy the unrealistic assumption that Congress will cut Medicare spending, the bill still double counted $528 billion in reductions from Medicare. The double counts allowed the Democratic Majority to make the false claim of extending Medicare’s solvency while also offsetting costs of the new health care entitlement.

Finally, the Democratic Majority conveniently left out the cost of maintaining the doctor reimbursement rate for the next ten years. According to CBO, the dox fix alone would have added another $209 billion in costs. Did the majority allow the reimbursement rate for doctors to drop this summer? Of course not. In June, they tacked on the cost for the extension to the current deficit. Thus, avoiding a politically unpalatable CBO score.

 

[CatholicGerman]

Good News,

This isn’t about a budget shortfall, this is about unfunded liabilities that everyone is trying to downplay so that the public doesn’t soil its pants. The deficit is not the scary thing, it is the unfunded liabilities and the mountains of debt.

Time will tell how my country is doing. Unlike you, I am very young and am paying enormous sums into systems that won’t be there for myself and my children. I am saddled with debt accrued for benefits I never received. You are nonchalant about all of this, which must be nice. I am weary of your indifference to our fate and our future.

Okay, he’s a circus act. Fine. Whatever.

Keep moving folks. Nothing to see here.

 

[Ocean52680]

He isn’t earnest. I’m not sure if there’s anyone discussing it earnestly right now. It’s August, not a time for seriousness in politics. He’s one more circus act (not that I have anything against circus acts).

I see you pulled another “fact” out of some unspeakable place.

Mr. Ryan started working on the Roadmap to America’s Future during the 2005-2006 session of Congress. For the record, that was before two previous elections, before the recession, before tarp, and before this Administration.

 

[Good_News_1]

Unlike you, I am very young and am paying enormous sums …am weary of your indifference to our fate and our future.

Ryan won’t help YOU, or hurt ME. He is going to keep older people in the same system. Then he is going to give younger people a lower benefit when they retire. You will have less healthcare in your old age (depending on income), as will your children. The Ryan proposal depends on the voucher payments growing more slowly than the cost of healthcare. He’s offering rationing, and his rationing is based on ability to pay.

Now, if the system is going into the severe deficit that is predicted, we are looking at rationing anyway. But, I would, at least, ask for some sort of sensible rationing, as opposed to something that is going to squeeze the average person, and let the poor and the wealthy divide the resources.

Also, the eligibility age for medicare, as I understand it, increases to 70 in his proposal. How does this work? The reason medicare exists is, in part, because the elderly are not insurable cost-effectively. That is just pushing uninsurable people into the private (or whatever we have at that point) system because the government wants to save money. In other words, it doesn’t really address the structural function of medicare, which is to insure the old, who are bad risks.

So, to recap: I’m indifferent to YOUR fate as a young person because I don’t want YOU to wait until 70 to have affordable health insurance, and I don’t want to see YOUR benefit go down every year as you age, while I will be unaffected.

Keep moving folks. Nothing to see here.

Can you defend Ryan’s voucher system? Is it in any way different than I described? You are the one who thinks he has great ideas.

 

[Good_News_1]

I see you pulled another “fact” out of some unspeakable place.

You could google “August is the silly season in politics.” Google isn’t so unspeakable.

Mr. Ryan started working on the Roadmap to America’s Future during the 2005-2006 session of Congress.

He’s in the news now, during the silly season. Silly ideas are always around, they just come to the fore in August - or so commentators say, with some justification. The fact that he is in the news in August isn’t conclusive that his ideas are not serious. His ideas provide that proof on their own.

 

[Ocean52680]

He’s in the news now, during the silly season. Silly ideas are always around, they just come to the fore in August - or so commentators say, with some justification. The fact that he is in the news in August isn’t conclusive that his ideas are not serious. His ideas provide that proof on their own.

So says the expert.

 

[Good_News_1]

So says the expert.

Is anything I said about Ryan’s proposal incorrect?

 

[CatholicGerman]

I never said his ideas were great, merely that they are realistic and that he is daring to address the solvency problems in the system. That makes him the only one in Congress to do so, at this point.

And young people are well aware of the fact that we aren’t going to get diddly squat from anyone when we are old. My main critique on Mr. Ryan’s plans are that he pretends that we will get anything at all. We will only pay in, not receive.

Of course the elderly will do much better than us with his plan, but they will do better than us with any plan. Nothing else is possible because we live in a democracy that is no longer a true republic, where the elderly are an enormous constituency. They will not vote for anything that does not skew in their direction.

Young people are serfs, and our children are slaves. We know this. So does Mr. Ryan. But he is proposing a plan to reduce the amount of money we will have to pay to our rulers. This is progress. Perhaps our grandchildren will merely be serfs and not slaves. Don’t knock it unless you can present a viable alternative that does not add to our debt load and prolong our servitude.

 

[Good_News_1]

And young people are well aware of the fact that we aren’t going to get diddly squat from anyone when we are old.

But that isn’t a remotely justified belief. That is your personal choice to believe that. Why do you want to believe that?

Young people are serfs, and our children are slaves.

Good point. My kids and grandkids are like some guy tilling the ground for a feudal lord in 1400, but they have SUVs, smartphones, and college educations, can fly anywhere in the world, choose their own beliefs, start their own businesses, and do absolutely anything they want in their lives. They are serfs because they pay a modest portion of their wages into a government system that has a solvency crisis looming in a couple decades.

But he is proposing a plan to reduce the amount of money we will have to pay to our rulers.

The money isn’t paid to “rulers.” Now it’s paid to doctors. Under Ryan, it’s paid to insurance companies.

I’m really sorry things are so dire in your country, but it bears no resemblance to the one I live in. You are always free to move.

 

[CatholicGerman]

And you are free to wake up.

We live in a country that is turning into a gerontocracy. Most young people are aware that they won’t get any Social Security without drastic reform (that the elderly won’t support), and Medicaid/Medicare is in much worse straits. Heck, about a fifth of young Americans can’t even get a job, much less pay into these systems. The young people you know may all be rolling in cash, but things are looking a bit different out here.

We are being involuntarily loaded with debt that we will be forced to work to service. That makes us indentured servants, at best.

 

[Good_News_1]

We live in a country that is turning into a gerontocracy.

A feudal gerontocracy? The horror.

indentured servants

It’s hard to have a discussion when hyperbole is substituted for argument.

 

[Black_Rose]

We are being involuntarily loaded with debt that we will be forced to work to service. That makes us indentured servants, at best.

The “Road to Serfdom” analogy would not work since while paying taxes to a government is superficially analogous to paying a portion of one’s production to a feudal lord, at least in welfare states, it is spent for the benefit of the majority of people, defined by the lower and middle classes. However, in feudalism, the money merely goes to the feudal lord’s conspicuous consumption or to raise an army, not to benefit the serfs.

Regarding the debt (and deficit), there is little doubt that the Bush tax cuts and the “war on terrorism” contributed to it. The right can also be blamed for the past deficits for fighting the “war on communism” by the Reagan Administration. Of course, costs of the war on communism, Bush tax cuts, or war on terrorism are still being paid today as the debt service expenditure in the Federal budget.

cbpp.org/images/cms//12-16-09bud-rev6-28-10-f1.jpg

 

[Good_News_1]

The “Road to Serfdom” analogy would not work since while paying taxes to a government is superficially analogous to paying a portion of one’s production to a feudal lord,

It isn’t even superficially analogous. The problem modern people have with serfdom is related to lack of social mobility, not the amount of the tribute.

Regarding the debt (and deficit), there is little doubt that the Bush tax cuts and the “war on terrorism” contributed to it.

Regardless of whether that is true, it has little to do with the subject we were discussing here: the projected shortfalls in entitlement programs. Reducing the national debt will increase flexibility in responding to these shortfalls, but the math for social security and medicare just doesn’t work, independently of what is done with the general budget. And those entitlement programs are associated with Democratic priorities.

Of course, costs of the war on communism, Bush tax cuts, or war on terrorism are still being paid today as the debt service expenditure in the Federal budget.

It seems a little arbitrary to assign certain disfavored projects responsibility for the deficit. The entire government ran red ink, not just Republican programs. The targeted tax cuts (and judicious tax increases) of the Reagan era and Reagan’s successful conclusion of the cold war are really not comparable to Bush, who lost two wars through sheer incompetence and campaigned on the ludricrious notion that the government had taken in too much money and needed to give it back. No president should be casually compared to George W. Bush.

 

[sw85]

Tax. Medicare is just like social security, except it is tied up with exploding medical costs. It is easy, as a matter of math, to solve the demographic issue. The health care piece is more troublesome.

Hmmm? Between Social Security and Medicare, the unfunded liabilities are approaching something like $110 trillion.

By contrast the GDP of the entire world is just over $60 trillion.

The money isn’t there and can’t be raised.