All cuts are not created equal

ALL CUTS ARE NOT CREATED EQUAL…. Taken at face value, the debate over “cuts to Medicare” can be a little confusing.

For many years, Republicans sought steep cuts in Medicare, which Democrats fought vehemently against. Last year, Dems crafted a health care reform plan that was financed in part by savings in the Medicare program, prompting counter-intuitive cries from the GOP: “They’re trying to cut Medicare!” Last week, Rep. Paul Ryan (R-Wis.), the ranking Republican on the House Budget Committee, unveiled a GOP budget blueprint that slashes Medicare to the extent that the program as we know it would practically be eliminated.

But when the parties talk about taking money out of Medicare, they have very different ideas in mind. Jonathan Cohn had a very helpful explanation on this today.

For starters, the Democrats’ reductions don’t appear to be as large as what’s envisioned in the [Republican “Roadmap” strategy]. Also, under the Democratic plan, most seniors would still be getting their coverage directly from the government, which has lower overhead than private sector insurers. So every dollar the Democrats spend on seniors would actually go a little further.

No less important, the Democratic plans wouldn’t simply slash spending and let the market sort itself out. Instead, the Medicare cuts are part of a broader package of reforms designed to change the way Medicare pays for services. These reforms are designed to reward efficiency (by, for example, paying more to doctors that join integrated group practices) while penalizing inefficiency (by, for example, paying less to hospitals with high rates of infection or, eventually, paying less money for drugs that don’t work that well). They are also designed, quite frankly, to push down the prices that providers charge.

This is a critical difference. If you simply reduce the money flowing into Medicare, relying only on the wits of beneficiaries to figure out how best to spend what’s left, seniors are bound to end up with less care. That’s the Republican method. But if you also introduce system-wide changes that reward more efficient care and force down provider prices, the dollars in the program really might go farther — so that spending less doesn’t always mean getting less. That’s the Democratic approach.

A GOP lawmaker told Roll Call the other day, “There’s a lot of worry that we beat the Democrats up on health care for cutting Medicare and now we’re going to turn around and do it.”

That’s true, but it’s incomplete — the Dems’ cuts are defensible and intended to help the system and seniors. The Republicans’ cuts? Not so much.