What makes this cost control different from all other cost controls?
One of the difficulties conservatives had opposing the Affordable Care Act was that the program was projected to cut the deficit. They got around this by denying the projections: The cuts might pass CBO's muster, they said, but they'd never be implemented. Congress would roll them back the moment an angry senior sent an intemperate letter. And they weren't starting till 2018, which is proof that Democrats never intended to implement them.
On the bright side, conservatives have now found a better way: "If the left embraces the Domenici-Rivlin approach to Medicare, I'll dance in the streets," Reihan Salam writes. For those who don't know, Reihan is an excellent dancer (not to mention freestyle lyricist), and so this is an attractive prospect. But if you look hard at Domenici-Rivlin, it's hard to see what makes him so happy.
In the short term, it lifts Medicare Part B premiums from 25 percent of the program's costs to 35 percent of the program's costs. In the longer-term -- which is to say, uh, 2018 -- Medicare's spending gets a modified cap: If it grows by more than GDP+1 percent, beneficiaries have to pay the difference or move into a private plan. The only way a private plan would be cheaper, however, is if it covered much less,* as Medicare is about 20 percent cheaper than private insurance because of its massive bargaining power. So seniors will be faced with the option to pay a lot more or get a lot less.
That's a credible way to cut costs. But it's vastly more aggressive than anything in the Affordable Care Act. So here's my question: What's the theory of American politics by which Domenici-Rivlin can be implemented, but the much milder cost controls in PPACA cannot be?
*It's also possible that the exchanges will drive down the costs of insurance so aggressively that we'll get much more care for much less money. As the Domenici-Rivlin plan says, "The expectation is that increased competition among plans fostered by the
Medicare Exchange, and increased beneficiary interest in these plans, will keep costs from rising rapidly and result in higher quality, more cost-effective health care." But if conservatives believe that, they should also believe that PPACA is vastly understating its projected savings.
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