When evaluating any debt-reduction plan, I get the sense some immediately ask a surface-level question: does it cut Medicare? If it does, the plan is misguided (or terrific, if you’re not a fan of Medicare). If it doesn’t, then we can move on to other concerns.
The problem, of course, is that this kind analysis is superficial. Medicare, unlike Social Security, faces legitimate fiscal problems and will need meaningful reforms. Indeed, as any objective look at the nation’s long-term financing shows, the United States doesn’t really have a long-term debt problem, so much as we have a long-term cost-of-healthcare problem. As Jared Bernstein put it recently, “As long as health care costs (and, as the population ages, demand for services) continue to spiral up, it’s going to create huge problems.”
Given this, policies that “cut” Medicare deserve scrutiny, but to reject them reflexively is a mistake. Not all Medicare cuts are created equal. Those who want to increase the Medicare eligibility age are not in the same boat as those who want to tweak hospital reimbursement formulas.
As for President Obama’s debt reduction plan, Jonathan Cohn does a nice job walking though some of the proposed changes to Medicare the administration intends to pursue.
[T]he cuts Obama has in mind are more or less consistent with the kind of cuts that you find in the Affordable Care Act: They are reductions designed to change the way Medicare pays for treatment and services, ideally (although not always) in ways that will actually improve the efficiency or quality of care. To the extent they would force individual seniors to pay more, it’d be in the form of higher premiums from wealthy seniors or higher co-pays for treatments likely to be unnecessary or wasteful.
In short, if this proposal were to become law — fat chance, I know — the providers of health care along with wealthy seniors would have to make do with less. And, with any luck, health care will actually get a little better as a result.
Jonathan goes through some of the policy details, and it’s well worth reading.
I’d just add one related note about politics. I’ve seen some suggestions that, even if some fiscal reforms to Medicare are reasonable from a policy perspective, Democrats would be foolish to propose any such changes for political reasons — Dems want to go on the offensive on Medicare in the 2012 elections, and if the party supports Medicare cuts, the edge disappears.
I understand the point, but I disagree with the analysis. The House Republican budget plan, as crafted by Paul Ryan, didn’t tweak Medicare financing, it literally eliminated Medicare from existence, replacing it with a privatized voucher scheme. Nearly every GOP lawmaker in the House and Senate voted for this garbage, and it helped Democrats flip a “red” district to “blue” in a special election in May.
A proposal from the White House for slightly higher out-of-pocket costs for home health care and Part B services isn’t comparable to — and doesn’t negate — the ridiculous Republican plan to end Medicare altogether. The plan presented by Obama this morning arguably makes the program stronger; the GOP plan obviously can’t say the same.
The Democratic edge on this issue, in other words, doesn’t simply disappear.