Crying ‘Mediscare’ won’t fix anything 

Do House Republicans want to kill the elderly? If you listen to the left these days, you would certainly think so.

Last week, a liberal advocacy group called The Agenda Project — which claims to advance “rational, effective ideas in the public debate”— released an ad showing a look-alike of House Budget Committee Chairman Paul Ryan pushing an old woman in a wheelchair off a cliff.

“Is America beautiful without Medicare?” the ad says. “Ask Paul Ryan and his friends in Congress.”

Clearly, the GOP Medicare reform has struck a nerve. Democrats have focused on that part of the budget above all others. Aware that it would represent the most significant conservative policy innovation since the welfare reform of the mid-1990s, and persuaded that it will prove unpopular with seniors, liberals are intent on making political hay of the Medicare proposal while preventing its enactment, as they did in the Senate on Wednesday. And yet, for all that they believe the Ryan plan is a Republican vulnerability, Democrats seem unwilling to speak about it honestly. Maybe they know the facts do not support their case.

According to the Congressional Budget Office and Medicare’s trustees, the program has a long-term unfunded liability of more than $30 trillion. It’s about a decade from insolvency. The trustees’ latest annual report said the Medicare trust fund is projected to run out of money five years sooner than was projected last year. Its current trajectory would swallow up the federal budget.

Taxes could not be raised high or fast enough to keep up with Medicare’s growth without crushing the economy. “Medicare as we know it” is not an option. Leaving the program alone means it simply won’t be there for future seniors. The question is how to reform the program in order to save it.

Democrats cannot deny the figures, but President Barack Obama’s budget offered nothing beyond Obamacare as a solution. Of course, the effects of Obamacare are already accounted for in the latest actuarial projections, since Obamacare is current law. Indeed, in an extraordinary letter affixed to the recent trustees’ report, Medicare’s chief actuary said Obamacare’s approach to the program — price controls determined by a board of experts and devoid of market-based reforms that could help health care providers improve their efficiency — would actually exacerbate Medicare’s troubles.

The Republican budget offers precisely such market-based reforms. It proposed not just to reduce the growth rate of Medicare spending, but to introduce consumer pressures into the system that would create financial incentives for providers to work more efficiently and reduce the growth of the health care costs that are at the heart of the problem.

Right now, Medicare pays all providers the same price for a given service, regardless of quality, efficiency, outcome, the cost to the provider or patient satisfaction.

Medicare recipients play no part in determining who is paid and how much, and they have no sense of what their health care costs are. Providers have no financial incentive to deliver better care at lower prices. And price controls that reduce what Medicare pays per service (the Obamacare solution) would only create an incentive for providers to supply a greater volume of services to make up the difference. That is exactly what price controls have done in the past.

The House Republican proposal would have changed Medicare’s counterproductive design. Insurers and providers would have competed for seniors’ dollars. They would have been free to find innovative ways to offer better quality at lower costs. That’s how markets produce efficiency, by letting sellers find ways to offer buyers what they want at prices they want to pay.

This article is adapted from The Weekly Standard.

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Yuval Levin

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