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The virtues of Ryan's roadmap

Thumbnail image for ryanflips.JPGKevin Drum took aim at Rep. Paul Ryan's admirers last night, arguing that Ryan's vaunted honesty about spending cuts simply obscures a different sort of vagueness. "His plan merely caps various kinds of spending: there's a cap on Medicare, a cap on Social Security, and a cap on domestic spending," Drum writes. "Reduced to its policy essence, that's it."

But that's how single-payer works, too: It puts health-care spending into a single budget and caps its increase. That's how the Clinton plan worked, what with its global budgets and premium caps. That's how Jacob Hacker's plan for the Economic Policy Institute worked: Inside the exchanges, spending could only grow by GDP plus one percentage point. That's how the strong public option would've worked, as payment could only grow using Medicare's formula, which doesn't permit the cost increases of the private market.

At the end of the day, that's why Ryan's plan is a more honest entry into the debate. For a long time, liberals were talking about the sort of things you would actually have to do to get health-care spending under control while conservatives simply criticized the downsides of those intimidating reforms. And the main thing you have to do is get health-care spending into a single budget and then stick to it. You can do that by having the government set payment rates for providers or by having it set subsidies for individuals. Democrats were admitting this and thus taking on the burden of its problems, while Republicans were simply denying it.

Ryan's proposal is an admission of the reality. And so now we get to have a conversation. How would you prefer to see growth slowed? Medicare becomes a private program and you have to buy your own private insurance with checks that pay for less and less? Or Medicare puts you and 40 million of your closest demographic friends into a big pool and goes to the medical industry and says that if they want access to these millions and millions of customers, this is how much they can charge?

If we're going to ration -- and as even Ryan admits, we are -- how should we do it? Would you prefer us to say that if you can't afford something you need, then tough? Or would you prefer we put a lot of money into research so your doctor has a better idea of what'll actually help you, and thus we can start by cutting our unnecessary spending?

Eventually, we're going to have to make these decisions. And the sooner the debate is about these decisions, rather than one side confining their involvement to discrediting the other side's solutions, the sooner we will.

By Ezra Klein  |  August 3, 2010; 9:31 AM ET
Categories:  Health Reform  
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Comments

Except Ryan isn't trying to bring medical costs under control, he wants to slowly strangle Social Security and Medicare into non-existence.

You're assuming good faith where there's none to be had. This is about drowning the government in the bathtub, not actually addressing the problem.

Posted by: lol-lol | August 3, 2010 9:44 AM | Report abuse

That's sort of how most budgeting exercises work (like budgeting within a family) -- you allocate an amount and make the hard choices within that. right?

But for more important stuff, you need a lunch video, and this evening Green Day's end of summer US tour kicks off in Camden. Here's a snippet of human joy and democracy in action from last year's Green Day show in Philadelphia -- this guy is a beacon of joy http://www.youtube.com/watch?v=MZbKoJfymTQ

I suppose there may be a couple of naughty word problems, and this is the Post. A falsehood here and there on the op ed page, no big deal, but a naughty word may be too much?

Posted by: bdballard | August 3, 2010 9:47 AM | Report abuse

"If we're going to ration -- and as even Ryan admits, we are -- how should we do it? Would you prefer us to say that if you can't afford something you need, then tough? Or would you prefer we put a lot of money into research so your doctor has a better idea of what'll actually help you, and thus we can start by cutting our unnecessary spending?"

I prefer Rep. Ryan's characterization:

"Rationing happens today! The question is who will do it?"

Note also that the definition of "unnecessary spending" is spending on someone else. When it comes to their own healthcare, most people don't take the high minded approach of forgoing expensive treatments to benefit the system. They are more willing to accept that they may not be able to afford something. They will definitely resent being told they aren't allowed to have it because of a decision by an expert in the bureaucracy.

The question really comes down to whether you believe one of these two points of view:

Rep Ryan:
"This sector isn’t immune from free-market principles."

http://voices.washingtonpost.com/ezra-klein/2010/02/rep_paul_ryan_rationing_happen.html

Dr. Berwick:

"Fifth, please don’t put your faith in market forces. It’s a popular idea: that Adam Smith’s invisible hand would do a better job of designing care than leaders with plans can. I do not agree. I find little evidence anywhere that market forces, bluntly used, that is, consumer choice among an array of products with competitors’ fighting it out, leads to the health care system you want and need. In the US, competition has become toxic; it is a major reason for our duplicative, supply-driven, fragmented care system. Trust transparency; trust the wisdom of the informed public; but, do not trust market forces to give you the system you need. I favor total transparency, strong managerial skills, and accountability for improvement. I favor expanding choices. But, I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do."

http://www.pnhp.org/news/2010/may/a-transatlantic-review-of-the-nhs-at-60

Posted by: jnc4p | August 3, 2010 10:02 AM | Report abuse

The public option would allow us to reduce total spending and improve quality! Well, la de da. I am dazzled by your wonkery.

Posted by: ostap666 | August 3, 2010 10:03 AM | Report abuse

wait a minute Ezra didn't we have posts in the past about how the Public Option's costs would be at or greater than private insurance because they wouldn't deny claims like the evil insurance companies do? They wouldn't have as strict case management? Utilization review??

Funny numbers again?

Posted by: visionbrkr | August 3, 2010 10:09 AM | Report abuse

Clinton raised taxes.

Ryan's plan would lessen taxes.

Ryan's plan is an austerity plan.

Clinton never proposed austerity measures.

Get real Ezra. You have become beholding to Ryan because he grants interviews to you.

Posted by: lauren2010 | August 3, 2010 10:12 AM | Report abuse

Rather than starting with health care, it seems wise to start with something a bit more attainable. The school meals program seems like a good place to start.

The school meals program has two basic goals: assuring that all students are offered nutritious meals and providing assistance to impoverished student who cannot afford to purchase such meals. The existing program is at best hit-or-miss, with significant disparities both in nutritional content and in meaningful assistance. I'm a big believer in school meals -- always ate 'em, usually enjoyed them, and want everyone to have 'em -- but also recognize a few problems which I've boiled down into a list of seven and which can easily be addressed.

Rather than starting with health care, let's try our collective hand at school meals. If there was a place to discuss the issue, I'd be up for it -- and, who knows, school lunch might become the model for resolution of other issues.

Posted by: rmgregory | August 3, 2010 10:13 AM | Report abuse

and here's some real money saving ideas. Let's add more government agencies than we can even count, falling all over each other, one not having a clue what the other one was doing. Didn't WAPO just run an expose on the defense industry and how we don't know how many contractors are out there? Don't we agree that this is the wrong way to do it yet we just started this mess in healthcare with PPACA?

http://www.politico.com/news/stories/0810/40561.html

Posted by: visionbrkr | August 3, 2010 10:14 AM | Report abuse

visionbrkr:

The public option that was under debate towards the end would have only been available pretty much just to people without insurance. And the people buying it would've tended to be older and sicker. So the premiums would've been higher because the pool of people to be covered would be more expensive. Not really difficult to understand.

A true public option that's available to every person and every business would be able to leverage that coverage pool effectively to bring down costs.

Posted by: lol-lol | August 3, 2010 10:16 AM | Report abuse

That's why I specified strong public option. That version used Medicare payment rates, and saved a lot of money. The weak public option, as I often wrote, was the one that was in the bill, and it wouldn't have saved money.

Also, the same comments come up in each thread about Ryan, and I find them disappointing. It's silly to think I need Ryan's interviews. They mainly just get you all, my readers, annoyed. I don't get a bonus check for doing it or something. But I think it's important to give Republicans space to explain what they want to do, and why they want to do it. They have some power now, and may have a lot after November, and if you don't understand their agenda and why they believe in it, I'm not doing a good job.

Posted by: Ezra Klein | August 3, 2010 10:22 AM | Report abuse

lol-lol,

the question inevitably ends up being who can do it better, private industry or government. Personally I side that private industry can do it better (when correctly regulated as they are now to be) than government. The problem is that there are so many government agencies, so much waste being added that people don't even know about. Again many high risk pools aren't even set up. Funding will not nearly be enough. Premiums for those plans are still more than people can afford and from the politico article I copied. . .


"The legislation, for instance, mandated HHS to establish an Interagency Task Force to Assess and Improve Access to Health in Alaska by May 7, as well as an Advisory Committee on Breast Cancer in Young Women by May 22.

HHS has yet to appoint members to the breast cancer committee and is currently reviewing nominations, according to HHS spokeswoman Jessica Santillo. The Alaska task force didn’t hold its first meeting until July 16."


Somehow I don't trust government to RUN healthcare. How have they done in reining in Medicare's costs?


Posted by: visionbrkr | August 3, 2010 10:29 AM | Report abuse

"If you don't understand their agenda and why they believe it, I'm not doing a good job."

Look, dude, I'm 45 years old, born and raised in a hardcore Republican family in the evangelical South, and don't need to be lectured by you about the GOP's agenda. I've been combating it my entire life. As lol-lol and lauren point out here, Ryan's goal is to dismantle the safety net, not engage in a high-blown policy discussion with a SoCal-bred journalist whose experiences with red-state Republicans is, um, not exactly vast. By spotlighting Ryan again and again, you're giving credence to the most extreme right-wing views evah.

Or to put it another way: if Ryan's policy positions are intellectually solid, worthy of consideration and debate, then why haven't Digby, Krugman and other influential progressives followed your lead? They haven't because they recognize Ryan for what he is.

Bottom line: your grasp of the motivations and tactics of red-state Republicans is limited, to put it charitably.

Posted by: scarlota | August 3, 2010 10:38 AM | Report abuse


I don't think I'd put it as meanly as Scarlota, but I do agree that Ryan's not actually trying to advance some sort of policy platform with nuanced mechanisms of incentives. His cost saving policies read like an afterthought; I think it's just a bit of nerd-baiting.

Though Ryan's policy arguments in general (excepting this case) shouldn't be dismissed out of hand, as he does know what he's talking about. That actually makes him worse, I think. As he isn't being ignorant so much as disingenous.

And why are we saying the public option wasn't going to have utilization review? It never got far enough along to get to the point where those decisions were made yo...

Posted by: ThomasEN | August 3, 2010 10:55 AM | Report abuse

Apologies for sounding mean, but I'm getting sick and tired of Beltway progressives bending over backwards to accord extreme right-wing views a respect they don't deserve. (You certainly don't see David Brooks or anyone to his right lauding the policy views of Nancy Pelosi or Barney Frank.) I suspect that one reason why Digby and Krugman consider Ryan so whacky is that they don't live in Washington, hence haven't drunk the Very Serious Kool-Aid.

Posted by: scarlota | August 3, 2010 11:01 AM | Report abuse

ThomasEN,

using the phrase "nerd baiting" isn't mean? Well I guess not as mean as scarlota was.

Yes it never got that far but the fact that the public option would not save as much as many expected or hoped was absolutely discussed at the tail end of the debate in relation to the CMS actuary reports compared to CBO's reports and the main idea discussed was that they wouldn't be denying claims in many of the ways insurers do including but not limited to utilization review.

Posted by: visionbrkr | August 3, 2010 11:08 AM | Report abuse

If we ever lose Social Security, this is how it's going to happen. We're going to look at people like Paul Ryan who don't like the program, who are ideologically opposed to it, and pretend that they want to save it, and that we have to "work together" with them.

Posted by: mukome | August 3, 2010 11:31 AM | Report abuse

We have had the Zeke Emanuel/Victor Fuchs voucher proposal around for several years now. It's the only reasonable way out of the problems we will face and eliminates both Medicaid and Medicare in the long run. Only problem is the passage of the national sales tax to fund it. Anything short of this is band aids on a broken system.

Posted by: agoldhammer | August 3, 2010 11:56 AM | Report abuse

There's also competition.

Almost 58% of med school applicants are turned away. You can't really argue that such a high number of applicants are unqualified. What appears to be one limiting factor is the availability of residencies after graduation. This has also limited the establishment of new medical schools.

Residencies are limited by Congress. The overwhelming majority of them are paid for by Medicare and, as a cost cutting measure, the total number has been capped for over 10 years. This creates a severe bottleneck in the pipeline and an estimated 150,000-person shortage of physicians nationwide.

You can't have effective competition in a market where the total number of doctors is not sufficient to treat the total number of patients.

Posted by: pj_camp | August 3, 2010 11:59 AM | Report abuse

Ezra talks about Ryan's plan because he has a plan. He talks about Ryan's policy initiatives, because Ryan has definable policy initiatives.

It makes him unique and different, in this current crop of Republicans.

Posted by: Kevin_Willis | August 3, 2010 12:07 PM | Report abuse

Great post Ezra. That seems like a pretty fair characterization of Ryan's plan. I personally don't think the voucher approach is the way to go, because it would result in less and less buying power over times and wouldn't do much to control inflation. But I do commend Ryan for at least offering a plan, since the Republican's seem to be offering very few new ideas these days.

Posted by: SnowleopardNZ | August 3, 2010 12:50 PM | Report abuse

I equate Ryan's plan with that of Arthur Laffer trying to prove that Laffer Curve works because he is advocating to blow up Social Security and Medicare and place it in the free market system. Recent events have proven my case why it does not work because it will be at the mercy of whatever happens.

One of the problem trying to do something is dealing with the ideological poles between the two sides which is akin to having two stubborn old men in a room.

Posted by: beeker25 | August 3, 2010 12:53 PM | Report abuse

Milton Friedman said it best.

The only "American" way for reducing the spiraling increases in healthcare costs is to immediately expose to every single consumer of medical services the actual costs for those services.

Imagine what food prices would be like if we had comprehensive food insurance plans whereby we pay lump sums at the beginning of every year and then go to the grocery stores and simply fill our carts as we desired.

Well that is what we do with healthcare.


Marty Feldstein had a plan. If only Obama (& his puppetmaster, George Soros) weren't so emboldened by the fillibuster-proof Senate majority we'd have had a sensible moderate policy that most Americans could get behind.

Instead we have madness!!!! We've turned every private insurance company into a finger puppet of the federal government---we have Single-Payer. It will escalate costs beyond anything we've ever seen! And the quality of care will plummet. And instead of just the poor filling up Emergency Rooms, it will be all non-rich Americans, as the Emergency rooms will be the shortest lines for healthcare in the USA. Just look at Massachussetts!

Posted by: FastEddieO007 | August 3, 2010 12:54 PM | Report abuse

scarlota,

Not only were you a bit mean, but your ad hominem about Ezra's SoCal birthplace is pretty silly. Ezra hails from Irvine, which is something like ground zero for the anti-tax, anti-social services brand of conservatism that Ryan is pushing here. I'm sure he's plenty familiar with their methods and tactics. While a lot of the nasty bits of modern conservatism come out of the "evangelical South", the stuff that Ryan's selling is at least as much a product of Ezra's hometown. Not that any of this parochial BS matters even a little bit.

Posted by: alecpm | August 3, 2010 1:37 PM | Report abuse

Have any of Ryan's critics actually read what he proposes? These aren't extreme right wing views. This isn't a free market plan. Free market is keep what you earn, and plan and save for your own retirement, and sink or swim. Ryan's plan is nothing of the sort.

He gives people an option to invest, with a federal guarantee on principal contributions. They can stay with the traditional system, and even opt back into it if they choose.

He increases the benefit for the poorest in the traditional program to 120% of the federal poverty level.

He raises the retirement age but if you have enough in your account you can retire early.

He changes the formula for benefit calculations from growing with wages to growing with prices, but protects the poorest from this change.

His plan creates a solvent social security program.

http://www.roadmap.republicans.budget.house.gov/plan/#retirementsecurity

I don't see how he can be "destroying the safety net" if he increases benefits for those who are worst off. He's just taking the phrase 'safety net' literally.

Posted by: justin84 | August 3, 2010 2:00 PM | Report abuse

Ezra,

Thanks for this post. Ryan is the rare thoughtful Republican and he deserves an honest hearing wherever he can get it. Ryan is consistently critical of his own party as well as the policies of the current administration. He is the rare politician that is actually trying to engage the debate with ideas and concrete policy proposals.

Steve

Posted by: FatTriplet3 | August 3, 2010 3:37 PM | Report abuse

Honestly how can you report Ryan's policy proposals as "serious" when, to quote Krugman, his plan "calls for a huge increase in public debt over the near term, offset by hypothetical spending cuts four decades from now"
(and really you should reprint the figure from Krugman's post, http://krugman.blogs.nytimes.com/2010/07/08/further-adventures-in-fake-deficit-hawkery/
which in turn comes from the analysis of the Center on Budget and Policy Priorities, http://www.cbpp.org/cms/index.cfm?fa=view&id=3114; see also http://yglesias.thinkprogress.org/2010/03/paul-ryans-budget-doesnt-balance-the-budget/ )
and his tax plan, to quote yglesias, provides "Higher Taxes for 90% of Americans, Less Revenue for the Government" (http://yglesias.thinkprogress.org/2010/03/the-ryan-tax-plan-higher-taxes-for-90-of-americans-less-revenue-for-the-government/)
So it's not just that he really truly proposes to dismantle Medicare and Social Security, which I suppose might be serious policy proposals, just horribly awful ones; but his proposals on taxes and deficits are not in any way serious -- they are just the usual Republican "starve the government and give money to the wealthy", along with a promise that his plan, after 40 years of super-high deficits, will get deficits under control. To report on his "serious policy proposals" without pointing out any of these problems is, unfortunately, a real dis-service, the opposite of enlightening and educating the public, and I write that reluctantly as someone who overall admires your work.

Posted by: kenm3 | August 3, 2010 3:41 PM | Report abuse

*using the phrase "nerd baiting" isn't mean?*

It isn't, unless you regard "nerd" as some insulting pejorative. Ryan is basically nerd-baiting, and that's a great term for what's going on. He's making overtures to all of the policy-geeks (and wannabes, like David Brooks) in DC who fantasize over debating policy solutions during a panel at the Brookings Institution where they would get to rub shoulders while Congressmen, like Ryan, while they debate the "issues of the day." The fact that none of Ryan's proposals are particularly serious and that he's an drunk-on-Ayn-Rand loon who wants to dismantle the public safety net is simply ignored. In the intellectual bubble of DC, Ryan is what DC people think a "smart person" is like.

Though a more cynical take on Ezra's affection for Ryan would be that Ryan is more up front than most Republicans about what he wants to do, and giving Ryan publicity forces Republicans to be put on the spot about whether they agree with his ideas.

Posted by: constans | August 3, 2010 4:10 PM | Report abuse

The frustration that I have with the majority of politicians in Washington is they no idea how about the scope of health care. The majority of these legislators are lawyers who have never worked in the health care industry so how would they even have a clue about effective cost savings without compromising care....I have worked in the health care industry and it nauseating to listen and read the rhetoric these leaders chant about...Why not actually consult with health care professionals who actually provide direct care and work with patients...Maybe that concept is just too simple for all the highly educated elitists in Washington...

Posted by: Rhonda5 | August 4, 2010 12:55 AM | Report abuse

The frustration that I have with the majority of politicians in Washington is they no idea how about the scope of health care. The majority of these legislators are lawyers who have never worked in the health care industry so how would they even have a clue about effective cost savings without compromising care....I have worked in the health care industry and it nauseating to listen and read the rhetoric these leaders chant about...Why not actually consult with health care professionals who actually provide direct care and work with patients...Maybe that concept is just too simple for all the highly educated elitists in Washington...

Posted by: Rhonda5 | August 4, 2010 12:56 AM | Report abuse

How does social security work? It requires most applicants die before or shortly after benefits kick in. And with that ingenious system it is still in trouble, fade to healthcare?

Posted by: jmounday | August 4, 2010 8:37 AM | Report abuse

Have Medicare ration health care? Heaven forbid. That's been the job of the health insurance industry for decades!

And such a good job they do by denying coverage for pre-existing conditions and disallowing life saving procedures they dismiss as experimental.

But nobody, even Paul Ryan is looking at the most egregious sins of the health care industry: the collusion between insurers and providers to gouge us on health care costs.

Let me provide three concrete examples from my own experience. Keep in mind that I have a $5,000 deductible PPO with a nearly $800 monthly premium.

(1) Three visits for physical therapy totaling 90 minutes were billed almost $1,0000 to my insurance. My PPO's deal with the provider reduced the amount to $750 -- for an hour and a half of therapy? While I can understand a provider charging twice its direct costs for this service to cover overhead (indirect costs), I know firsthand that the therapist is not paid $250 for the 90 minutes of her time. This is price gouging personified -- and both the insurance company and therapy center are in collusion to price gouge the consumer.

(2) My doctor says that it costs about $12 to run the blood tests I need. But the hospital that processes the blood tests bills my PPO $400 and their agreement brings my price down to around $200 -- for tests that cost the hospital $12 to conduct. My doctor has instructed me to tell the nurse that I'll pay for the tests myself and it will cost me just $35 because that's what the hospital charges when there's no insurance involved. This kind of collusion between provider and insurer only promotes the price gouging.

(3) I have a monthly prescription that costs $117. Now it's available as a generic and it costs me $87 when I use my insurance. However, the manufacturer has reduced the price of the generic to $35 -- and my PPO will not honor that price. It still charges me $87. So I'm buying it for $35 without applying it to my $5,000 deductible, saving me $624 a year (but not contributing to my deductible).

These are concrete examples of how the health care industry gouges the consumer -- and nobody is doing anything about it. I've inquired about other insurers and have learned that they all engage in these inexcusable practices. And there appears to be nothing in the Health Care Reform Act to bring an end to these practices.

What's a consumer to do?

Posted by: dl49 | August 4, 2010 10:44 AM | Report abuse

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