Calling the Republicans’ bluff on Medicare

Bruce Bartlett says this was what he was doing in his recent call in Economix blog to allow the scheduled Medicare Part B physician cuts to take place, as part of a budget/debt ceiling negotiation strategy:

Space prevented me from explaining my proposal more thoroughly. I was trying to do two things. First, I wanted to call the Republicans’ bluff. They keep saying that deep Medicare cuts are their price for raising the debt limit – as if they would be doing Obama and the Democrats a favor by preventing a default on the debt – by laying a specific Medicare cut on the table. Since it’s already in law, it’s going to happen unless Congress takes positive action to prevent it. So Republicans will have to either allow doctors’ fees to be slashed or come up with a pay-for to do another doc-fix and put the problem off for another year.
As long as Republicans are allowed to pretend that they can effectively abolish Medicare, as the Ryan plan does, while asserting that no one will be worse off they are going to have their cake and eat it too – appearing to take entitlement spending seriously, thus earning them undeserved respect from Washington’s community of really serious people (RSP), while avoiding a tsunami of protest from the nation’s elderly if they really understood what the Republicans are proposing or thought it might actually take effect.
If it is the case that Medicare reform that lowers its future costs over projected levels must be agreed to as part of raising the debt ceiling between now and the first of August or so, here are the general options that seem plausible in policy terms in that time frame:
  • Raise the eligibility age
  • Increase the Medicare payroll tax rate
  • Increase means testing (raise Part B premium and/or add a Part A premium for some beneficiaries, presumably high income)
  • Allow the planned cuts to Part B to go into force as Bartlett suggests, or create a new ‘doc fix’ that still cuts payments by a lesser amount
  • Implement and beef up the IPAB
  • Agree to some sort of a cap on future Medicare growth with or without enforcement mechanisms of some sort

Obviously, all of these will be plenty hard for Republicans and Democrats alike, and the political plausibility of such options in that time frame seem questionable, at best. Democrats and Republicans have been talking about health reform for around two years now. Will the debt limit actually be the incentive they need to cut some sort of health reform deal?


update: cleaned up a few messy places

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