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Archive for April 21st, 2011

Welcome Instapundit readers. This post looks at the politics of Medicare reform. You may also want to click on this post to see a video that succinctly explains the policy of Medicare reform.

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Republicans are understandably nervous about polling data showing considerable opposition to the Ryan plan’s Medicare proposal – particularly since they just voted for a budget resolution in the House of Representatives that includes such a reform.

Their unease is warranted. GOPers almost surely will be subjected to a scorched-earth campaign in 2012, featuring lots of demagoguery about  Medicare “privatization,” mixed in with shrill rhetoric about big insurance companies and “tax cuts for the rich.”

I don’t particularly care about the GOP’s electoral prospects, but I do want to save my nation from fiscal collapse, so that means I don’t want entitlement reform to become radioactive.

So what can be done to counter the predictable onslaught against Ryan’s Medicare proposal?

First and foremost, reformers should borrow some advice about counter-attacks from President Obama. He said during the 2008 campaign that if opponents “bring a knife to the fight, we bring a gun,” and a high-ranking White House aide in 2009 urged supporters to “punch back twice as hard” when dealing with attacks against government-run healthcare.

While reformers obviously should avoid the unseemly rhetoric associated with the current Administration, they should copy the aggressive approach. Timidity is a recipe for defeat.

For instance, do not allow the left to compare the Ryan proposal to the status quo of unlimited handouts. That system is bankrupt and even the Obama Administration acknowledges that something dramatic needs to happen to control costs.

Indeed, the best strategy for reformers may be to compare the Ryan plan to Obama’s scheme for a beefed-up “Independent Payment Advisory Board.” Sounds wonky and technical, but IPAB is the bureaucratic entity that will be in charge of imposing price controls that lead to the rationing of health care for the elderly.

In other words, the real issue is who will be in charge of the pool of dollars that will be used to provide healthcare for the elderly. Ryan’s plan would let seniors choose a health plan that best suits their needs and provide a big subsidy to finance that policy. Obama’s plan, by contrast, will keep seniors in a government-run system and let a bunch of unelected bureaucrats decide what kind of care they should receive.

Moreover, reformers should fight fire with fire. If the left is allowed to use “privatization” to describe Ryan’s plan (notwithstanding massive government involvement and subsidies), then reformers should refer to IPAB as a “death panel.”

My colleague Michael Cannon is a one-man truth squad on these issues, and he already has explained that there was a lot of merit in Sarah Palin’s accusation that Obamacare would create something akin to a death panel, and he has documented the various ways that government-run healthcare will lead to rationing.

To conclude, here are excerpts from two excellent columns that recently have been published on Obama’s IPAB scheme.

Rich Lowry of National Review writes.

Why does Obama need specifics when he has the Independent Payment Advisory Board, or IPAB? If spending on health care is the biggest driver of government spending, then IPAB is Obama’s most important deficit-reduction initiative. …Obama…implicitly acknowledges that [Medicare] is broken and bankrupting us. Otherwise, he wouldn’t be proposing a cap on Medicare’s growth that is at least as stringent as anything New Gingrich proposed in the 1990s… Under Obamacare, IPAB is to hit a target for Medicare’s growth that significantly squeezes the program beginning in 2014 (in his budget speech, Obama said he wants to ratchet down the cap even further). …In the fact sheet released in conjunction with his budget speech, the White House says he wants to give IPAB “additional tools” and “additional enforcement mechanisms such as an automatic sequester.” …IPAB won’t make the notoriously inefficient Medicare program any more efficient. Through arbitrary reductions on payments to providers, it will simply reduce the supply of care. …Medicare’s chief actuary warned that Obamacare will drive providers out of the program. If you love Medicaid, you’ll adore the new IPAB version of Medicare. It will be the experts’ gift to America’s seniors.

The Wall Street Journal’s superb editorial page also has a good analysis.

The Independent Payment Advisory Board was created in the ObamaCare statute, and the President will appoint its experts in 2012 to six-year terms. …Starting in 2014, the board is charged with holding Medicare spending to certain limits, which at first is a measure of inflation. After 2018, the threshold is the nominal per capita growth of the economy plus one percentage point. Last week Mr. Obama said he wants to lower that to GDP plus half a percentage point.  Mr. Ryan has been lambasted for linking his “premium support” Medicare subsidies to inflation, not the rate of health cost growth. But if that’s as unrealistic as the liberal wise men claim, then Mr. Obama’s goals are even more so. …Since the board is not allowed by law to restrict treatments, ask seniors to pay more, or raise taxes or the retirement age, it can mean only one thing: arbitrarily paying less for the services seniors receive, via fiat pricing. …Now Mr. Obama wants to give the board the additional power of automatic sequester to enforce its dictates, meaning that it would have the legal authority to prevent Congress from appropriating tax dollars. In other words, Congress would be stripped of any real legislative role in favor of an unaccountable body of experts. …the board will decide “what works” and apply it through regulation to all of American medicine. …As a practical matter, the more likely outcome is the political rationing of care for the elderly, as now occurs in Britain… Messrs. Ryan and Obama agree that Medicare spending must decline, and significantly. The difference is that Mr. Ryan would let seniors decide which private Medicare-financed insurance policies to buy based on their own needs, while Mr. Obama wants Americans to accept the commands of 15 political appointees who will never stand for election.

Even though I play senior softball, I’m not a senior citizen by Medicare standards. But when I reach that age, I know what I’ll decide if my choice is “privatization” or a “death panel.”

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America is in fiscal peril in the short run because of a 10-year spending binge by Bush and Obama and in the long run because of a toxic combination of entitlement programs and demographics.

Congressman Paul Ryan has introduced a budget plan to address America’s fiscal crisis, but Senator Reid and President Obama have summarily rejected his proposal, so it appears the United States will continue to drift in the wrong direction.

Something is needed to compel action. One might think that such an impetus would have been provided by the recent decision by Standard & Poor to downgrade the fiscal outlook for the United States. But this development hasn’t affected the spending culture in Washington.

But there is hope. Senator Corker has legislation that would force Congress to act – and automatically impose fiscal discipline if they don’t. His bill caps – and then slowly reduces – government spending as a share of national economic output (gross domestic product).

I’ve already written about the merits of this proposal, including an explanation of the all-important enforcement mechanism of sequestration (automatic spending cuts). Here’s Senator Corker’s description of his plan, as delivered at a Cato Institute conference on the Economic Impact of Government Spending.

To build on the Senator’s comments, there are two things that deserve special emphasis.

1. He correctly understands that the problem is the size of government. As explained in this video, spending is the problem and deficits are a symptom of that problem.

Unfortunately, many policy makers focus on the budget deficit, which often makes them susceptible to misguided policies such as higher taxes. At best, such an approach merely substitutes one bad way of financing federal spending with another bad way of financing federal spending. And it’s much more likely that higher taxes will simply lead to more spending, thus exacerbating the real problem.

2. Senator Corker’s legislation has a real enforcement mechanism. If Congress fails to produce a budget that meets the annual spending cap, there is a “sequester” provision that automatically takes a slice out of almost every federal program.

Modeled after a similar provision in the successful Gramm-Rudman-Hollings law of the 1980s, this sequester puts real teeth in the CAP Act and ensures that the burden of government spending actually would be reduced.

Some people complain that Senator Corker’s plan is too timid and that it doesn’t balance the budget by 2021. While it would be desirable to impose additional fiscal restraint, the Tennessee Senator has deliberately chosen a more modest goal in order to attract support from colleagues on the other side of the aisle. And he does have Democratic co-sponsors, something that is critical given the composition of the Senate.

Since I’m just a policy wonk, I’ll leave it to the other people to argue about what’s feasible in the current political environment. My final comment, though, is that we’re on an unsustainable path that will lead to the end of American exceptionalism and turn the United States into a decrepit, European-style welfare state. So I’m not going to complain if someone has a plan that finally moves policy in the right direction, albeit not quite as fast as I prefer.

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