• 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

    • The Democrats already have a plan to reduce Medicare spending in the ACA. To reduce it in the way Republicans propose would be incredibly stupid, both politically (major winning strategy in the next election) and from a policy perspective (increases healthcare spending while shifting burden to those who can least afford it).

      To do so as the price of raising the debt limit would be worse. Failing to raise the debt limit would be terrible for the economy and even worse for the Republican’s business base. Voters and supporters might even notice.

      The Republican plans on Medicare are likely worse for the Democratic base than failing to raise the debt limit, and probably worse for Republican voters too.

      Raising the eligibility age is the same as cutting benefits

      Payroll tax hike is not something the Republicans will allow

      Means testing won’t produce enough revenue unless we set the limit at $60,000 or something no one regards as high income

      Doc fix change might be possible

      IPAB is death panels in Republican mythology

      Cap on future growth – see history of doc fix

      Anyway, the main point is there is a tremendous political assymetry here between the Dems and Repubs.

    • It would politically satisfying to call their bluff, but suppose they go ahead and slash doc’s salaries? I am not sure we can afford to take the risk. Docs will increase their numbers of procedures to make up the difference. Costs would rise.


    • As long as the republicans continue to avoid proposing anything that would lead to an increase of revenue, emblematic by their refusal to reduce subsidies to mega oil corporations, then they will never be taken seriously in this debate.

      So rather than coming to logical grips with what government is actually supposed to do, i.e. to protect the interest of the American people, they have taken the untenable position of proposing to diminish medicare to the a point beyond recognition as a social safety net.

      So now their only recourse is hold the debt ceiling (and every one of us) hostage, in hopes the democrats cower and join them in their “kill medicare fiasco. Oh sure, that will put them back into political viability alright; Then they will be able to say, “Look, THEY voted to kill medicare too!”

      Face it; the republicans would rather have the elderly sick and dieing, homeless in the streets, and/or see the total collapse of the world financial system rather than have that black guy as president for four more years. Thus anyone that votes republican these days, deserves the world they will get as a result, Problem is, my family and I will have to live in that world too.