The Medicare Two-Step

“I was for it before I was against it.” At more than a few junctures in history, the previous statement has been uttered by politicians eager to explain away contradictions or evolutions in their ideology. This idea isn’t unique to either conservatives or liberals. But in the context of our national debate on healthcare and social programs, the argument has found full flower in the fertile minds of Republican lawmakers.The Rational Middle would like those minds to grow fully formed policy ideas and sell them honestly; all the better for a functioning democracy. We are not however, as the poet might say, waiting with bated breath for this to happen.

For all of the attention conservatives pay to PBS, NPR, and food stamps, they know that the principal driver of long term deficits (the only deficits that are a threat) is the inflation of health care costs. These costs are reflected, at the federal level, in the Medicare program. The budget resolution adopted by the Republican House dutifully contains an aggressive “restructuring” of Medicare that would balance the federal budget over the next two decades. But the resolution, and the GOP reasons for its adoption, stand in stark contrast to their positions on the Democrats’ attempt at health care cost control.

When it comes to Medicare, conservatives were against it…before they were for it…before they were against it. They fought tooth and nail against its adoption, and have tried repeatedly to kill it. Then, when the President’s health care reform plan had at its core large cuts to provider reimbursements in Medicare Advantage plans and other areas, conservatives were there to call Democrats “granny killers”; most comically, in light of Rep. Ryan’s “Roadmap to America’s Future”, they were there to call “ObamaCare” rationing.

Of course, once health care reform was passed, they were born again into fiscal discipline hawks and remembered how much money Medicare cost. Make no mistake about it, the Republican plan is to kill Medicare as we know it. The only reason they are hedging on that plank now, is because it might cost them a House seat (or 80) come 2012.

Medicare, along with Social Security, are two programs that conservatives revile above all others. Libertarians, who form the last remnant of intellectual conservatism, believe that the private marketplace could better meet the needs of the public for retirement income and health care. The Paul Ryan budget plan would test that hypothesis to the full, by continuing to harvest the FICA tax which pays for Medicare and distributing the funds through vouchers with which citizens could shop for private insurance.

The Ryan Plan is intellectually honest; it does not take away anyone’s retirement health care (at least not directly) and it could close the deficits projected for the federal government. The Ryan Plan is not being sold to the public in an intellectually honest manner. First, the vouchers specified by Rep. Ryan do not cover the average premiums that seniors in the first year of the plan (2021) can expect to see. In fact, they are worth an estimated 31% less. That does not, of course, include the realities of our marketplace not amenable to clean projection.

The private insurance market in today’s America inefficiently covers about 85% of our citizens. It does so strategically in order to maintain and grow profit margins. Senior citizens are precisely like the high cost customers that private insurance now seeks to get rid of in their current strategy. At a minimum, it is dishonest to state that the Republican system would allow for the near-universal coverage U.S. seniors now receive. At least 15% of seniors in the 2020’s would be without health insurance coverage, guaranteeing them sub-optimal long-term care, and guaranteeing doctors and providers higher levels of revenue write-downs than they already suffer. (It is not uncommon for a hospital to write down 15-20% of its revenue as uncollectable).

The Ryan Plan is the rationing, granny-threatening monster that conservatives convinced large numbers of Americans that the Patient Protection and Affordable Care Act was. It isn’t intentionally designed to hurt anyone; it isn’t mean-spirited; Rep. Paul Ryan isn’t a monster. But the plan focuses on ending a fiscal problem at the expense of ignoring a market failure that can and should be fixed by democratic action. The idea here, and with many other conservative policy ideas today, is that if a national problem doesn’t hit a federal budget line, then it isn’t really a national problem.

But the wealthiest nation in the world not being able to extend, to the full reach of its citizenry, the benefits of its best in the world care is a national problem. Sub-standard medical care and endless phone calls to insurance companies are not recipes for real economic growth. If the Ryan Plan is adopted, we will have seniors in 2025 looking for jobs into their 70’s to afford trips to their specialists. Our economy can’t create enough jobs now, and we think we can afford golden agers in the work force?

The Ryan Plan makes the classic mistake of the supposedly “pro-business” conservatives of today; it doesn’t measure its plan against real world alternatives and real world consequences. What happens in a 21st Century America with no private pension plans and no federal retirement security? What happens to that America when those underfunded retirees face growing medical costs? What happens to an economy built on consumerism when the only consumer products a family can pay for are their ageing parents pharmaceuticals?

These questions have been rushed past, without consideration, by a political block being driven to a narrow and fiscally wrong-headed reading of fiscal discipline. The mentality has caused normally sensible policy-makers to turn themselves inside-out explaining away their previous policies. One of the ironies of the Medicare Two Step is that Medicare, like Social Security, are enormously popular programs paid for via a flat tax (the presumptive conservative holy grail). Everyone (to include illegal aliens whose employers help them with “identity cover”) pays the FICA tax. Everyone (except for high wage earners who pay lower rates) pays the same rate for both programs. So why all of the conservative angst?

One obvious answer, is that the $2 trillion or more available to be sent annually to Wall Street hedge funds and the Cigna’s and Aetna’s of the world should Social Security and Medicare be privatized, present a powerful political incentive. The lure has proven irresistible to Republican lawmakers in particular, and a handful of Democrats with their hands held way out. Some on the conservative side of the fence have spent the last 9 months or so believing their own propaganda. They have convinced themselves that Americans would buy these ideas at the wholesale rate. But working class Americans angry at Obama because of Death Panels aren’t likely to support this plan. And American seniors are not happy with the idea that their children might fair worse in retirement than they have, and this plan isn’t making them happy. Republicans could very well dance themselves right out of the election.

The Rational Middle is listening…