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Rep. Paul Ryan's daring budget proposal

ryanflips.JPGThe White House's 2011 budget is only the second-most interesting budget proposal released recently. First prize goes to Congressman Paul Ryan, the ranking Republican on the House Budget Committee, who's released a budget proposal that actually erases the massive long-term deficit.

That's not mere press release braggadocio. CBO agrees (pdf). Under the CBO's likeliest long-term scenario, deficits are at 42 percent of GDP in 2080. Under Ryan's proposal, we're seeing surpluses of 5 percent of GDP by that time.

But Ryan's budget -- and the details of its CBO score -- is also an object lesson in why so few politicians are willing to answer the question "but how will you save all that money?"

As you all know by now, the long-term budget deficit is largely driven by health-care costs. To move us to surpluses, Ryan's budget proposes reforms that are nothing short of violent. Medicare is privatized. Seniors get a voucher to buy private insurance, and the voucher's growth is far slower than the expected growth of health-care costs. Medicaid is also privatized. The employer tax exclusion is fully eliminated, replaced by a tax credit that grows more slowly than medical costs. And beyond health care, Social Security gets guaranteed, private accounts that CBO says will actually cost more than the present arrangement, further underscoring how ancillary the program is to our budget problem.

An important note to understanding how Ryan's budget saves money: It's not through privatization, though everything does get privatized. It's through firm, federal cost controls. The privatization itself actually costs money. The CBO's analysis of Ryan's Medicare changes tells the story well:

Both the level of expected federal spending on Medicare and the uncertainty surrounding that spending would decline, but enrollees’ spending for health care and the uncertainty surrounding that spending would increase.

Under the Roadmap, the value of the voucher would be less than expected Medicare spending per enrollee in 2021, when the voucher program would begin. In addition, Medicare’s current payment rates for providers are lower than those paid by commercial insurers, and the program’s administrative costs are lower than those for individually purchased insurance. Beneficiaries would therefore face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.

Moreover, the value of the voucher would grow significantly more slowly than CBO expects that Medicare spending per enrollee would grow under current law. Beneficiaries would therefore be likely to purchase less comprehensive health plans or plans more heavily managed than traditional Medicare, resulting in some combination of less use of health care services and less use of technologically advanced treatments than under current law. Beneficiaries would also bear the financial risk for the cost of buying insurance policies or the cost of obtaining health care services beyond what would be covered by their insurance.

That's a bit of a slog, so here's the translation: The proposal would shift risk from the federal government to seniors themselves. The money seniors would get to buy their own policies would grow more slowly than their health-care costs, and more slowly than their expected Medicare benefits, which means that they'd need to either cut back on how comprehensive their insurance is or how much health-care they purchase. Exacerbating the situation -- and this is important -- Medicare currently pays providers less and works more efficiently than private insurers, so seniors trying to purchase a plan equivalent to Medicare would pay more for it on the private market.

It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need. This is, in its simplest form, a way to limit the use of a finite resource: Money. Here's the graph:

CBO's Analysis of Congressman Ryan's Roadmap - Powered by Google Docs_1265061388193.jpeg

You can argue whether this cost control is better or worse than other forms of cost control. But it's a blunt object of a proposal, swung with incredible force at a vulnerable target. Consider the fury that Republicans turned on Democrats for the insignificant cuts to Medicare that were contained in the health-care reform bill, or the way Bill Clinton gutted Newt Gingrich for proposing far smaller cuts to the program's spending. This proposal would take Medicare from costing an expected 14.3 percent of GDP in 2080 to less than 4 percent. That's trillions of dollars that's not going to health care for seniors. The audacity is breathtaking.

But it is also impressive. I wouldn't balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. I'd prefer to aggressively reform the system itself so the care becomes cheaper, even if that causes significant pain to providers. I also wouldn't waste money by moving to a private system when the public system is cheaper. But his proposal is among the few I've seen that's willing to propose solutions in proportion to the problem. Whether or not you like his answer, you have to give him credit for stepping up to the chalkboard.

Photo credit: By Katie Derksen/The Washington Post

By Ezra Klein  |  February 1, 2010; 5:10 PM ET
Categories:  Budget  
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Comments

Maybe this is a move to push discussions and budgeting toward the right? Because there's no way any of this is going to happen. I was all for Bush's plan to "privatize" a small portion of Social Security payments, but privatize the whole thing . . .

And the words "Medicare is privatized." That makes me--a rock-ribbed, supply-siding, tax-cutting conservative--queasy.

I can't regard this as a serious budgeting proposal. I can only see this is an effort is go way, way overboard under the presumption that it might tilt the compass back in the direction of more modest cuts.

And kudos to the respect you give Ryan for his cajones, but I have a problem with any legislation that presumes things are otherwise going to be static up until 2080! Seriously. There will have been loads of new entitlement spending, probably a war or two or three, plus half the immediately unpopular measures would have been repealed very early on. Show me the CBO score on *that*.

I admire the thoroughness of his budgetary fantasy, but it's just not remotely realistic. Not to mention, if privatizing Medicare and Medicaid make things more expensive, what's the point? Why not just cap the costs through the existing bureaucracy?

Posted by: Kevin_Willis | February 1, 2010 5:24 PM | Report abuse

The caps and privatization of Medicare also have the advantage of effectively instituting death panels without needing to convene them.

This approach should also take care of the inheritance tax issue for the overwhelming majority of the population. Granted, it's already a moot question for most, but now this approach has the virtue of eliminating the question from the consciousness of 99 percent of the population entirely.

Posted by: JPRS | February 1, 2010 5:28 PM | Report abuse

At least this proposal, while painfully partisan, is realistic about the problems that need solved and their scope. Much better than proposing to get serious on public debt and then cap spending on discretionary non-defense, non-social security items.

Posted by: ideallydc | February 1, 2010 5:30 PM | Report abuse

Ezra, there's so many plans from health care to education that use vouchers. I assume that the people who like them have faith that consumers in a free market will demand a better product at a lower cost. Is there evidence this works when you take a public program and privatise it?

Or, as you suggest, does that market need to be highly regulated?

Posted by: ideallydc | February 1, 2010 5:34 PM | Report abuse

Dear DCCC,

According to the Census Bureau, Wisconsin's 1st Congressional District has 82,926 people ages 65 and over, all of whom should be utterly terrified of having Paul Ryan representing them. He is supposedly a rising star in the House Republican caucus who has now put in writing that he wants to GUT MEDICARE!!!!!!

What a buffoon.

Posted by: zeppelin003 | February 1, 2010 5:37 PM | Report abuse

Ryan's proposal is stunning in its stupidity - except for one thing: The Republicans will say that they offered a proposal that would have balanced the budget and the tax-and-spend Democrats rejected it. The Democrats will mumble something like Ezra's wonkish analysis above. Republicans - 1, Democrats - 0.

Posted by: adagio847 | February 1, 2010 5:41 PM | Report abuse

Although, having lampooned Paul Ryan for daring to write this down, I give him credit for addressing the long term problem in a real way. Most of his GOP counterparts are completely unwilling to walk the plank and say what they'd do, and governed as such when they ran the government and simultaneously cut taxes and went to war.

So, kudos to u Paul Ryan. I would that every Republican in the House and Senate come out and say they want to gut Medicare.

Posted by: zeppelin003 | February 1, 2010 5:42 PM | Report abuse

In 1965 proponents of Medicare argued that seniors were paying 20% of their incomes to cover the cost of medicine. They said Medicare would control these costs. They said it was cost 10 billion dollars by 1990.

In 1985, with Medicare now 20 years active, seniors were STILL spending 20% of their incomes to cover the cost of medicine. Medicare was already 65% over the projected outlays when adjusted for inflation.

In the pretend world of government controlling costs, expanding care, and miraculously avoiding default, Ezra Klein carves out a healthy wage and a large podium.

Posted by: snannerb | February 1, 2010 5:44 PM | Report abuse

Note to all Democrats entering this debate in an election year: avoid showing your math, sounding like someone who reads CBO reports and say the words "GUT MEDICARE" slowly and loudly, over and over and over until you're re-elected by a country mile. Thanks.

Posted by: zeppelin003 | February 1, 2010 5:44 PM | Report abuse

I'm curious about the adverse selection problem. A 76-year-old, with, oh, congestive heart failure, takes his voucher and goes where and buys what from whom?

Posted by: wendellbell | February 1, 2010 5:45 PM | Report abuse

@ snannerb, it's really stunning how quickly costs have grown. Then again, private insurance has been even worse, and Medicare is still much more efficient

Posted by: etdean1 | February 1, 2010 5:52 PM | Report abuse

snannerb,

Not sure where you're getting your numbers.

It's worth adding though, that on average, people in 1965 also died 8 years earlier than they do today.

I'd imagine too that the caps get phased in for political reasons, so that the grand kids and great grand-kids of the Me Generation who get stuck with the tab for the excesses of Reagan and Bush years -- are also the ones who get to see the benefit cuts.

That's a Republican version of "personal responsibility". i.e. "It's your responsibility to pay for my excesses".

Posted by: JPRS | February 1, 2010 5:56 PM | Report abuse

"Is there evidence this works when you take a public program and privatise it?"

With school vouchers, the evidence shows you can secure the same exact test results at half the cost. So why are we paying full price? Because monetary feudalists have no interest in giving up their cash lands.

Posted by: snannerb | February 1, 2010 5:59 PM | Report abuse

snannerb,

Same deal with school vouchers -- Once again: "Where's the beef?"

Posted by: JPRS | February 1, 2010 6:00 PM | Report abuse

Nevermind, snannerb, you're probably one of those folks who think that the GOP stimulus plan last year at half the cost of the actual one would have created twice the jobs.

Btw, any new sprouts on the money trees that you've planted?

Posted by: JPRS | February 1, 2010 6:02 PM | Report abuse

@JPRS Just a question, but has Google built success on top of replicating failed models that have doomed previous entrants into markets trying to organize information and making it useful?

Or, are they harvesting "new sprouts" from the money trees they've planted?

Posted by: snannerb | February 1, 2010 6:10 PM | Report abuse

Dems not only need to do a better job of explaining THEIR OWN bills (or budget proposals) to the masses ..

... they should ALSO do a better job of explaining the Republicans' bills.

As zeppelin implies above, it could do wonders for Dems in the future.

In the same vein, EZ: May I request that you provide an analysis of the Repubs' Health Care Reform Bill (HR4038)?

I tried to read it, but gave up pretty early in the process (defeated by "legalese"). I honestly would like to know what they are proposing. Does it make any sense? Is it workable?

If Ryan's budget proposal is any indication ... I'm not expecting too much from their proposed health care reform, but I would like to know more about it.

Posted by: onewing1 | February 1, 2010 6:30 PM | Report abuse

Rep Ryan's proposal clarifies the contrast between Democratic and Republican approaches. I suspect most center-right independents would consider the president's mode of thought more centrist than extreme after reading this.

Posted by: jduptonma | February 1, 2010 6:33 PM | Report abuse

When you talk about "failed" models with respect to education, you're talking to someone from the DC region who spent time in a public high school system that routinely churned out national merit finalists and semi-finalists.

Ironically, Eric Schmidt, the CEO of Google was among the distinguished alum of my fine public high school in the 1970s. One can only imagine the heights that Google would have ascended too today if it was less reliant on some public school by-product for its guidance . . .

In any event, when you talk about the magic of voucher programs, I'm the kind of person who's inclined to ask for evidence to support that kind of bare assertion. The notion runs counter too my experience.

I've spent some time in quality private schools too, so I also have a sense about the difference between quality private and quality public schools (some difference in class room instruction -- although the biggest differences are in terms of social networks and professional networks. Never mind that a voucher wouldn't purchase anyone entrance into the best private -- not-for-profit -- schools in the DC area).

Maybe in the case of really distressed, underfunded school districts it would make that kind of a difference; although the success or failure of a school system hinges on more variables than just class room instruction.

I appreciate the fact that there's a potentially very large for-profit industry waiting in the wings, so there may be a tendency on the part of legislators too look in that direction since it has the potential to provide them with a nice new revenue stream for their political campaigns (much less demanding too than labor unions -- especially once the programs are up and running).

With respect to Medicare your bare assertion raised a similarly skeptical vein.

Even without looking at your "source data" it's pretty telling that you gloss over the differences in life expectancy. We could definitely save a lot of money if we encouraged people to die 8 years earlier than they typically do these days.

Posted by: JPRS | February 1, 2010 6:42 PM | Report abuse

"Even without looking at your "source data" it's pretty telling that you gloss over the differences in life expectancy. We could definitely save a lot of money if we encouraged people to die 8 years earlier than they typically do these days."

Now there's change you can believe in.

When FDR setup social security in the 30s I dont think he intended to pay for 25 years of RV travel, rather than the commenter above's snarkish request for people to die sooner, we need to really come to grips at some point with raising the retirement age on the entitlements to a real age of retirement relative to 2010, which I'd say right now is 70.

Posted by: zeppelin003 | February 1, 2010 6:55 PM | Report abuse

Kudos to Rep.Ryan for making a gutsy proposal to manage the rising cost of healthcare entitlement spending. At least there's ONE Republican in the US Congress who is serious about tackling our deficit.

Now let's see how many people in his party he can get to rally around it.

Remember, these are the people who accused the Democrats of gutting Medicare because they wanted to eliminate the subsidy for private Medicare Advantage plans. These same hypocrites thought encouraging end-of-life counseling was "pulling the plug on grandma".

Lots of luck with your plan, Rep.Ryan. The Democrats should bring this to the floor and force all Republicans to vote on it.

Posted by: sambam | February 1, 2010 7:04 PM | Report abuse

@zeppelin Hang in there. There's always that political calculus the Democrats could use to win more seats to pass another bill that won't correct any of the long term fiscal problems we face.

But I thought you might raise the life expectancy variable. That would lead us to the later reforms. Those that pushed back the year you could qualify.

None of this really attempts to correct the fiscal crisis. Ryan is proposing a vehicle. So go tear it down. Go kill Ryan's political career. Do it.

Posted by: snannerb | February 1, 2010 7:07 PM | Report abuse

I read the CBO report on Friday and have been waiting for a blog post with the title "The Republican plan to ration health care to senior citizens." Because this is precisely what this plan does, on scale that no Democratic proposal has ever approached.

As a result of this proposal, we can also expect death panels who will deny senior citizens health care will let them die. The death panels will be run by private corporations though, which I suppose makes that OK in the Republican view.

Posted by: AviN1 | February 1, 2010 7:09 PM | Report abuse

zeppelin003,

The notion that the most retirees enjoy 20 years of RV travel on the basis of social security checks is pretty absurd. If a person spends 20 years of RV travel, odds are they're able to do it on the basis of some savings well above and beyond social security.

Right now we seem to prioritize tax cuts for the rich, wars without end, and bloated, inefficient financial and health care sectors at the expense of everything else. Fix a few of those issues and you start removing pressure in other areas.

While many developed democracies are facing the prospect of aging populations -- and doing things like raising retirement ages. We seem to be in an even worse situation than those nations. Even in terms of health care costs, Japan has a significantly older population than ours, yet their health care cost increases are nothing compared to ours. The same is true with western Europe.

Posted by: JPRS | February 1, 2010 7:11 PM | Report abuse

The fiscal problems we're faced by are not nearly as stark as Paul Ryan's fixes portend. We really can raise marginal income, corporate income, capital gains, and the estate tax levels a modest amount, along with reasonable reforms of Medicare and Social Security, assuming we have leaders in both parties who are adults and share the pain.

But thats not what we have, so I dont think Democrats should unilaterally disarm. So long as Republicans are willing to die on the hill that no billionaire anyplace can have his taxes raised without the US becoming East Germany I'm willing to destroy them because thats childish. So u bet people like Paul Ryan I'd ramrod his arse right out of the House for GUTTING MEDICARE.

Posted by: zeppelin003 | February 1, 2010 7:17 PM | Report abuse

But, but, but....Republicans are nothing but hypocritical obstructionists with no real plan! There can't possibly be a Republican plan, and certainly not one that takes a responsible, serious look at the hard choices ahead of us. Those choices that Obama just took a $1.6 trillion pass on while trying to make us believe George Bush made him do it.

Posted by: bgmma50 | February 1, 2010 7:21 PM | Report abuse

"The notion that the most retirees enjoy 20 years of RV travel on the basis of social security checks is pretty absurd."

I agree, and if u notice I never said most but make no mistake some do, and they get a check every month just like seniors who barely live on the little they get, and thats absurd.

"If a person spends 20 years of RV travel, odds are they're able to do it on the basis of some savings well above and beyond social security."

And means testing the entitlements would weed them out, and save the treasury a lot of money too.

"Right now we seem to prioritize tax cuts for the rich, wars without end, and bloated, inefficient financial and health care sectors at the expense of everything else. Fix a few of those issues and you start removing pressure in other areas."

We dont disagree on this, and no I dont think Social Security or Medicare is in need of radical reform, just modest changes that wont hurt anyone who really needs it.

Posted by: zeppelin003 | February 1, 2010 7:21 PM | Report abuse

"Consider the fury that Republicans turned on Democrats for the insignificant cuts to Medicare that were contained in the health-care reform bill"

The fury of this Republican was due to the fact that the savings weren't going to be saved. They were going to be spent on another ill conceived bloated, out of control entitlement.

Posted by: bgmma50 | February 1, 2010 7:24 PM | Report abuse

Huzzah!

Yes, it may be drastic to let the invisible hand ration health care instead of a faceless bureaucratic. Yes, a nation of investors may not be ready to hand over their entire life's savings to the next Bernie Madoff.
But at least they are real ideas, not just talking points!

If they are ridiculous ideas they will be demolished. If they are sane they will be plagiarized. And that's what serious debate is about.

Congratulations to Rep. Ryan for taking the risk and for being an adult.

Posted by: CJTwillie | February 1, 2010 7:46 PM | Report abuse

DEATH PANELS

Posted by: Lomillialor | February 1, 2010 7:47 PM | Report abuse

I've got an easier way to balance the budget immediately : restore tax rates to the 1994 levels and then cut every gvmt program (defense included) in an equal percentage, as needed, to balance the budget.

Posted by: Lomillialor | February 1, 2010 7:50 PM | Report abuse

The concern over the deficit is a laudable one, but its really premature. The reality is these stark economic projections of unemployment above 8%, and GDP growth below 3% for the next several years is going to cancel out any bright ideas about "deficit reduction".

Regardless of what costs are involved we have to get people back to work, and I'd humbly suggest a 2010 edition of WPA to get this government really going after joblessness as the true menace that it is, and we can mop up the deficit later with many of the ideas everyone has already mentioned, on both the tax and expense sides.

Posted by: zeppelin003 | February 1, 2010 7:59 PM | Report abuse

i don't think anyone doubts that rationing will eventually be required when it comes to healthcare. Its just a matter of when and then of how you ration. I don't like this idea but I like the single payer option less for its deficiencies that it has. If costs aren't controlled it'll be here before we know it.

Posted by: visionbrkr | February 1, 2010 8:08 PM | Report abuse

We know that we can not afford to pay for gold plated health care for all of the baby boomers, so who is in a better position to decide who gets what and when? The individual or the goverment? I don't want a bureacrat deciding if grandma gets a hip replacement. I want the goverment to give her a yearly check and then grandma can shop around for the best deal. She can have a bake sale if she needs to raise more money.

Posted by: cummije5 | February 1, 2010 9:20 PM | Report abuse

"Consider the fury that Republicans turned on Democrats for the insignificant cuts to Medicare that were contained in the health-care reform bill"

The fury of this Republican was due to the fact that the savings weren't going to be saved. They were going to be spent on another ill conceived bloated, out of control entitlement.

Posted by: bgmma50

///////////////////////////

Based on what evidence, bgmma50?

(Never mind, I get it that it's based on some paranoid vision induced by a glue-sniffing episode that coincided with Reagan's 1984 SOTU address).

zeppelin003, I think we're largely in agreement with respect to Social Security.

Posted by: JPRS | February 1, 2010 10:23 PM | Report abuse

I don't think Republicans are going to rally around Ryan's budget. This is Ryan's baby, and he may find himself the sole Republican supporter. Again, I admire the big brass spheres putting this out there require, but if he is seriously proposing this as something hecwpuld like to see unilaterrally enacted, he's nuts.

It's no good (I don't think) to offer a budget that suggests we rid ourselves of deficits by killing old people and increase federal revenues by harvesting the organs of enemy combatants and selling them to wealthy Swiss industrialists. It may recognize the problems we face, but it stops far short of offering anything like a serious solution.

Posted by: Kevin_Willis | February 1, 2010 11:22 PM | Report abuse

Does Ryan also voucherize his pension and those of other parasites aka Senators, Congressman and federal employees? Or he is the complete hypocrite and thief that I think he is?

Posted by: mnjam | February 2, 2010 1:37 AM | Report abuse

Ryan starts with the premise that ALL the Bush tax cuts need to be extended, and the AMT and Estate Tax need to be repealed.

He then tries to construct a budget plan that will achieve that goal.

Hence this roadmap is a Dead End.

Posted by: cautious | February 2, 2010 4:23 AM | Report abuse

David Orszac yesterday called Ryan's proposals interesting and called for the deficit commission so that a bipartisan solution can be agreed on to solve the deficit problem.

It is clear Obama is going to focus on deficit reduction in the same way Bush focused on the war on terror.

It is also clear the purpose of the deficit commission is to teach Americans that the GOP are deficit peacocks. If however the GOP decides to act responsibly (for the first time in the last 30 years) and agree to the commission, then Obama is hoping to to get both parties to sign off on the coming cost cutting programs so Democrats alone don't take all the heat.

Posted by: Lomillialor | February 2, 2010 6:51 AM | Report abuse

It never ceases to stun me -- evidently I don't learn from experience -- how audaciously & flagrantly Republicans propose to take from the poor & give to the rich. To deprive seniors of the benefits for which they paid for decades is beyond contemptible; it is evil.

The Constant Weader at www.RealityChex.com

Posted by: marieburns | February 2, 2010 8:17 AM | Report abuse

I applaud Ryan and approve of his message.

Government is out of control and people need to take personal responsibility for spending and saving. That includes families taking care of their own.

The best thing that seems to be coming out of this latest recession is that people are finally tightening their belts, paying down their debts, and getting economically right.

The Government should follow suit.

Posted by: auntpittypat | February 2, 2010 9:14 AM | Report abuse

WHERE ARE THE DEMOCRATS????!!!!
In the 90's Gingrich ran squealing with his tail between his legs (sorry for the image) for even hinting that Medicare would 'die on the vine' as a result of his proposals - and this was in the midst of a Republican surge! Now we have Republicans advocating the dismantling of Medicare and PUTTING IT IN WRITING for God's sake! They are handing Obama and the Dems a huge, spiked club with which they can smash the regressive momentum of Congress with one swing! Why is no one seeing this?

Posted by: headphonejack | February 2, 2010 9:17 AM | Report abuse

This is a great proposal. You can think about the growth in health care costs like this: new innovations come along. They cost a million dollars. People get them covered under insurance and Medicare. Costs go up for everyone. If we want to cap the growth in health care costs, we need to slow progress a little bit, at least for those that want to use other people's $$$ to pay for it.

Posted by: staticvars | February 2, 2010 10:02 AM | Report abuse

by the way (and I know I'm a bit off-topic on this), but did anyone notice that the Republican Health Care proposal handed to Obama during the now famous Q&A session looked about the size of the pamphlets I get at work detailing how to properly wash one's hands? And they have the audacity to complain about not being taken seriously? My only hope is that a majority of Americans are not nearly as stupid as these con-men/agents of the rich think they are.

Posted by: headphonejack | February 2, 2010 10:06 AM | Report abuse

You are all focusing on all the cuts the government will make under Ryan's proposal. Has anyone considered the tax situation under his proposal vs Obama or the status quo? I imagine that you would get a hell of a lot less from the government, but in return you'd pay less taxes than you would if debt held by the public was 100% of GDP in 10-15 years.

This is a difference in ideology. Republicans want to heave SOME SORT OF RESPONSIBILITY on the vast majority of people in this country who seem utterly incapable of taking care of themselves. Democrats want the government to coddle every citizen from cradle to grave. The concern some of us have is, if you subscribe to liberal ideology on this, I'll get to pay 50% of my income (which is high but god i certainly work hard enough for it) and I get the same health care as some guy who is sitting on welfare.

Its never going to happen, but I like Ryan's proposal. I like it because i'm confident in my ability to earn money and properly plan for my health care needs throughout my life.

Posted by: donopj2 | February 2, 2010 10:21 AM | Report abuse

The $1.6T deficit for 2010 has nothing to do with entitlements, in fact it would be $1.8T if the payments into the SS Trust Fund were not misleadingly counted as general income.

Why are we not talking about the reasons for the current deficit and how to correct them, rather than vaporous projections 10-30 years into the future? Liberal politicians and pundits are letting Republicans and Wall Street define the terms of the debate.

Posted by: dowty | February 2, 2010 10:40 AM | Report abuse

to donopj2:
you're absolutely right - let's talk about taxes. specifically, let's talk about the fact that those with the highest incomes in America pay FAR LESS in taxes as a percentage of their income than the middle class. And anyone with a half a brain knows that the top marginal rate is a ruse and loopholes and shelters combine to bring that rate down significantly. By the way, I'm borrowing this argument from Warren Buffet, who's secretary pays a higher TOTAL tax rate than he does.

And while I'm at it - in response to your tired, 'coddling' argument - I don't see many well-heeled folks turning down Medicare when it's their elderly parent who needs care. I suppose that kind of coddling is acceptable to 'conservatives'.

Posted by: headphonejack | February 2, 2010 10:56 AM | Report abuse

donopj2, I really hope that you don't get cancer or get in a car accident and become paralyzed from the neck down, and lose your job, only to find out that your health insurance has a maximum limit on what it will pay when you aren't working anymore.

Because these things actually happen. And sometimes no amount of pulling on your bootstraps pays the medical bills.

Posted by: rpy1 | February 2, 2010 11:05 AM | Report abuse

"Medicare is privatized. Seniors get a voucher to buy private insurance,"

many seniors have problems with the donut hole. does anyone know a senior trying to figure that out? my mom was told to go to the gov website...she said, what's a website?

seniors are targets for scams -- the FBI has a section on seniors entitled,

Health Insurance Frauds:
http://www.fbi.gov/majcases/fraud/seniorsfam.htm

Posted by: jeeze56 | February 2, 2010 11:14 AM | Report abuse

Of course, just suggesting an approach is not the same as suggesting a viable solution.

Posted by: elfpix | February 2, 2010 11:16 AM | Report abuse

Ezra, you cannot have it both ways. Here you are critical of Ryan's proposal for seniors while you support the Tax on health insurance (the Excise tax) to control costs. That works the exact same way, have people accept more of the health care costs (lower premiums and higher deductibles).
Cost control should happen at the provider level and at the insurance level (elimination of private insurance and replacement with Medicare for all).

Posted by: ns3k | February 2, 2010 11:50 AM | Report abuse

Ryan isn't the only R suggesting the privatization route for entitlements. Chris Matthews interviewed Jeb Hensarling yesterday, who also spoke of "re-engineering" federal entitlements (Chris correctly said what he really meant was cutting entitlements, as well as privatizing, which proposal for Social Security reform failed miserably five years ago under Bush). Chris also tried to get Hensarling to say that House R leadership was committed to such an approach, but he kept dodging the question.

See Feb. 1: Hardball's Chris Matthews speaks with Rep. Jeb Hensarling, R-Texas, about whether it's possible to get $1.6 trillion of savings out of the budget released on Monday.

http://www.msnbc.msn.com/id/3036697/vp/35188221#35188221

I'd love to see them keep beating this drum, especially considering that senior voters tend to be more heavily represented in mid-term elections. I think Medicare and Social Security still have the potential to be third-rail issues in politics.

Posted by: reach4astar2 | February 2, 2010 11:59 AM | Report abuse

From what I understand Rep. Ryan's plan for Medicare would be to give everyone on average $11,000 to use towards their healthcare which is the average pay out from Medicare today. The poor and infirm would receive more and the wealthier would receive less. If any money was left over it would be put into a medical savings account which could be used for next years medical expenses. The payment would be indexed to a combination of Medicare inflation and medical inflation which as Ezra points out would not cover current medical inflation. However, the idea is that by taking the redistributist federal goverment out of the equation that market forces would eventually bring down medical inflation to a more sustainable level. As Ezra also points out current medical inflation is unsustainable. If anyone doubts that the free market can bring down healthcare inflation just look at the Medicare prescription drug plan which cost much less than anticipated due to market competition. The reason the Democrats and Obama don't like this plan is it actually uses America's capitalistic market driven economy instead of the everyone's a dependent socialistic big goverment Obamacare proposal.

Rep. Ryan also has a plan for fixing non medicare healthcare by giving everyone tax credits to buy their own health insurance anywhere in the U.S. and creating subsidized risk pools for those people, due to pre-existing conditions, are uninsurable.

So there you are. Democrats big goverment European style statist healthcare versus Republicans free market American style healthcare.

Posted by: RobT1 | February 2, 2010 12:18 PM | Report abuse

The most laughable notion in this entire debate is that Medicare on its current trajectory, and our and the world's current fiscal and economic trajectory, will be the same thing or better, just more expensive, in 2020, 2030, 2050, and beyond. You might as well count angels on the head of a pin.

Apparently, we're going to need economic disruptions on such a massive scale that the initial reaction to CBO or CBO-like scoring is laughter.

Within the rule of the game as its currently played, Ryan's proposals make some sense, but, if they appear fantastical to the progressive liberal mind ca. 2010, it's because the game is a fantasy.

Posted by: CK_MacLeod | February 2, 2010 12:19 PM | Report abuse

I am getting a feeling that Republicans are prepared to fully fund the current crop of retirees, and then entirely bail on the next generation of retirees.

It suggests Mr. Ryan may have an alternate political inspiration.

Saving benefits for retirees from the Cold Wars who are largely Republicans and ultra conservative; and slashing benefits for Baby Boomers who are generally less conservative and could even be, dare I say, Democrats.

Posted by: deanx | February 2, 2010 1:15 PM | Report abuse

cojones?

more like naive

as i understand it ryan has constructed an imaginary us budget using an imaginary voucher expense number in place of current medicare costs estimates

wow?

Posted by: jamesoneill | February 2, 2010 2:14 PM | Report abuse

"I don't want a bureacrat deciding if grandma gets a hip replacement. I want the goverment to give her a yearly check and then grandma can shop around for the best deal. She can have a bake sale if she needs to raise more money."

In that case, i don't want the government giving anything to grandma at all. The only logic for government to collect taxes from us in the first place is to pool our money so everyone can receive benefits and excercise some sort of collective buying power. If we can't have that, than don't take my money in the first place and let me fend for myself.

Posted by: lagnappe | February 2, 2010 3:28 PM | Report abuse

I have seen the light. Notwithstanding Mr. Klein's prior, thoughtful analysis today on why seniors cost $7 to $1, and that the Dr-Patient relationship is 1 sided, and that for decades I have supported candidates who care more about real solutions than being popular- I say to the Dems- put Ryan's budget up for an up or down vote. As is. No debating, no compromise, no amendments, no back room deals.

Posted by: TXMary | February 2, 2010 3:35 PM | Report abuse

I shudder at the comparison but this seems like the Gen Pinochet, Milton Freedman, Kissinger plan for Chile. Privatize and voucher everything and turn SS into a 401K. Post Pinochet as well as Thacher's England their Social Insurance programs had to be bailed out by guess who, the government.

Posted by: MerrillFrank | February 2, 2010 3:51 PM | Report abuse

Ezra Klein exhibits the classic axiom for Progressives/Liberals: if the solution does not begin with "government should" then it isn't a solution at all.

However, how wonderful Ezra Klein to be able to comment on a counter proposal to what the Left was trying to shove down America's throat. Imagine if instead the Left at least engaged in an actual debate about what system would be best for America how America would've given Obama massive credit for trying to tackle a huge problem. Unfortunately, their lust for and dogmatic tenet of socialized medicine got the better of them and led to them to be deceitful instead of forthcoming. Now they have laid themselves bare.

Posted by: cmb551 | February 2, 2010 5:26 PM | Report abuse

By the way, implicit in Paul Ryan's recommendation (which is what I would recommend) is that the true way to get costs under control is to get the biggest detriment out of healthcare, namely, government. This trope about it being "violent" to suggest that seniors should spend more of their own money for their own care is simply mindboggling. Turning Medicare from a stop-gap measure into an entitlement has led to explosive growth not only in healthcare costs but in Medicare's unfunded liability. This is no laughing matter and if we are to get government spending under control, the two biggest gorillas in the room (Medicare and Social Security) will need to be on the table and seniors will have to be told "violently" that their cherished programs cannot last forever.

Posted by: cmb551 | February 2, 2010 5:32 PM | Report abuse

This is a great proposal. You can think about the growth in health care costs like this: new innovations come along. They cost a million dollars. People get them covered under insurance and Medicare. Costs go up for everyone. If we want to cap the growth in health care costs, we need to slow progress a little bit, at least for those that want to use other people's $$$ to pay for it.

Posted by: staticvars
-----------------------------------------
I'm sure you were exagerating, but "other people's money"??? Have you peaked at your Social security or Medicare statement lately? It seems to me that the government has said, "here...let us hold that money for you and we'll invest it conservatively and make it grow, so that we can give it back to you when you are older and need it." OTHER PEOPLE'S MONEY must refer to the fact that the Gov't "borrowed it" and now they don't want to pay it back.

I AGREE WITH THE PROPOSAL THAT EVERYONE BE GIVEN THEIR PAID IN MONIES WITH MINIMAL RETURN...BACK AND LET THEM DEAL WITH IT IN THE PRIVATE SECTOR. That way the whiners can start over with THEIR MONEY.

Posted by: bad_santa | February 2, 2010 5:44 PM | Report abuse

Agree, full credit to Mr. Ryan for sticking his neck out.

I think the way this is supposed to work is that all medical care beyond basic diagnosis gets outsourced overseas. Do a web search on "medical tourism" & check the costs.

Sad to see another business/industry leave the country...

Posted by: bobmounger | February 2, 2010 9:33 PM | Report abuse

"But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need."

To say that government capping its payments is equivalent to rationing is misleading. Plenty of resources are finite, but the fact that government chooses not to pay for the or to limit the amount it pays does not mean it "rations" all of those resources.

Posted by: YSavaleski | February 2, 2010 10:10 PM | Report abuse

"To say that government capping its payments is equivalent to rationing is misleading. Plenty of resources are finite, but the fact that government chooses not to pay for the or to limit the amount it pays does not mean it "rations" all of those resources."

Umm, yes, it does mean the government is "rationing" if it has a limited number of dollars. There is no if, and, or buts about it. The government has a pool of dollars which it can only spend on so many things. It cannot spend an equal amount on defense and education and then expect that healthcare will not cut into those dollars. And then within healthcare expenditures it cannot say that consumers can consume with impunity if there are only so many dollars to pay for healthcare.

When one entity has a limited resource it must by definition ration it to ensure that there is enough for as many people as possible. The government is not exempt from this.

Posted by: cmb551 | February 2, 2010 10:23 PM | Report abuse

“Based on what evidence, bgmma50? Posted by: JPRS | February 1, 2010 10:23 PM

Which of my observations are you taking issue with, JPRS? That the “insignificant cuts in Medicare” Ezra referred to weren’t going to be saved? Or that they were going to be spent on another ill conceived bloated, out of control entitlement?

Posted by: bgmma50 | February 2, 2010 11:42 PM | Report abuse

"Umm, yes, it does mean the government is 'rationing' if it has a limited number of dollars. There is no if, and, or buts about it. The government has a pool of dollars which it can only spend on so many things. It cannot spend an equal amount on defense and education and then expect that healthcare will not cut into those dollars."

If the finite resource is dollars, and the government restricts its allocation of dollars, it is rationing DOLLARS, if we take your definition--not healthcare.

"When one entity has a limited resource it must by definition ration it to ensure that there is enough for as many people as possible. The government is not exempt from this."

True enough. If the government controlled the supply of healthcare, making decisions about who must be denied care, it could properly be said to be rationing healthcare. As it stands it is the market that does the rationing. A senior who can pay for the care will not be denied it. You may think that the government should ration care, but that is another issue. As it is, the government is limiting its allocation of money, not the provision or consumption of healthcare (Not to deny the influence of this money on healtchcare provision, but influence and control are two different things).

Posted by: YSavaleski | February 3, 2010 3:12 AM | Report abuse

One huge advantage to Rep. Ryan's plan is its predictability. Everyone knows, well in advance, exactly what the government's contribution will be.

This gives businesses enough time to build out different tiers of care that will appeal to buyers. Good business models don't get created overnight. If a business can calculate that in 5 years they need to be able to offer service 'X' for 60% less (because otherwise they will price themselves out the market), they'll invest in efficiency.

Predictability also helps individuals. If we know exactly what the government's contribution will be, and have the personal power to spend it as we wish (in other words, with vouchers), then we can plan for the kind of care we want, and individually decide how much we're willing to spend from other sources.

Frankly, I'm happy with minimal health care and a cheap wooden casket at the end. Others will want a lot more. What's wrong with that? It's not "rationing" if we all choose for ourselves. Then it's called the free market.

Knowing the truth about health care is heck of a lot better than being told that Medicare will take care of me. We all know that's just wishful thinking. I'll take the truth, any day.

Posted by: dmarney | February 3, 2010 6:52 AM | Report abuse

Though I doubt Ryan's Medicare proposal could ever see the light of day, it at least is an honest assessment of the daunting challenge facing the country in regards to health care.

I still don't see how its ever resolved, as the two political parties seem to be light years away from each other in their solutions. But I'm glad that the GOP is finally putting out real policy proposals, even if they are politically unpalatable.

Posted by: truth5 | February 3, 2010 3:12 PM | Report abuse


“Based on what evidence, bgmma50? Posted by: JPRS | February 1, 2010 10:23 PM

Which of my observations are you taking issue with, JPRS? That the “insignificant cuts in Medicare” Ezra referred to weren’t going to be saved? Or that they were going to be spent on another ill conceived bloated, out of control entitlement?

Posted by: bgmma50

////////////////////////////

The comment was in reference to two-points that you made in another discussion thread:

#1 About health care costs in 1965 versus today; #2 about the benefits of school vouchers.

You made some pretty bold assertions, but you didn't provide any evidence to support those assertions (e.g. studies, articles, etc).

YSavaleski,

Regarding rationing -- yes, dollars are being rationed. Effectively though, so is care (e.g. if the subsidies don't keep up with cost increases a larger and larger share of private incomes will go into covering the increase. The net effect is that -- as health care costs rise -- many will be priced out of effective care. It's not unlike the system that we currently have for the rest of the population in that care is rationed based on the ability of people to afford the care that they need when they need it. If the coverage subsidy is to small it will have the practical effect of killing a lot of elderly people earlier than they would have died otherwise.)

Posted by: JPRS | February 3, 2010 4:41 PM | Report abuse

Quit saying "slog."

Posted by: groucho_smith | February 3, 2010 5:56 PM | Report abuse

JPRS:

You missed my point: Of course rationing happens one way or another. The question at hand is is WHO does the rationing.

You say "If the coverage subsidy is too small it will have the practical effect of killing a lot of elderly people earlier than they would have died otherwise."
This misses the point that if the subsidy were big enough to cover everyone, there would still not be enough healthcare for everyone. There are not enough doctors to provide for the aging population, hence the limited resource. The government would have to prioritize certain patients and some would still die who would not have died otherwise. Only they would be forced out by a different mechanism: government selection rather than price. There is a substantive difference here. The fact that both lead to an outcome in which some people die is immaterial as to whether or not the government can be said to be rationing. It is a given that some people will die for lack of care. The question regards the agent.

Posted by: YSavaleski | February 3, 2010 7:40 PM | Report abuse

Free market is fine, but then you have to go complete free market and repeal the EMTALA statutes that require physicians and hospitals to treat all people regardless of ability to pay.

http://kalamazoopost.blogspot.com/2010/02/paul-ryan-for-president.html

Otherwise, insure everyone. That's the debate. Ryan is disingenuous to leave out that this will increase the numbers of seniors and disabled without insurance, if even by one.

Posted by: Tony61 | February 8, 2010 10:43 AM | Report abuse

Can someone ( not me) take a typical scenario; Someone aged 40 this year has an income of $ 50,000. Apply 3% inflation for he next 25 years. He follows the Ryan guidelines and invests the maximum of his Social Security withholdings into a private plan, using the DOW 500 equity averages. At age 65, right before retirement, the market crashes ala Oct 2008. What happens to he withdrawal? This assumes the retirement age stays 65, of course.

Posted by: lynnandtom | February 8, 2010 12:41 PM | Report abuse

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