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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Matt Yglesias on the Convergence Between Obama-Biden and Romney-Ryan on Medicare Reform



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Matt Yglesias has an excellent Slate column arguing that there is more agreement between Obama-Biden and Romney-Ryan on Medicare reform than is commonly understood. After observing that the Wyden-Ryan Medicare reform proposal and President Obama’s Fiscal Year 2013 budget proposal both cap Medicare’s growth rate at GDP growth plus 0.5 percentage points, he explains that the real difference between the two approaches is about the mechanism they use to keep costs below the cap:

The difference between outsourcing (Ryan) and centralized rationing (Obama) is an important one, but from a patient’s point of view they might end up looking pretty similar. Under Ryan’s approach, the poor will be left with bare-bones plans and more affluent seniors will either pay higher premiums to get more deluxe plans or else pay out-of-pocket for noncovered services. Under Obama’s approach, the poor will be left with bare-bones Medicare and more affluent seniors will either buy separate supplemental insurance plans or else pay out-of-pocket for noncovered services. The workability of Obama’s idea, in my view, is well-validated by international experience while the Romney/Ryan alternative amounts to taking a leap of faith in the magic of the private sector. But ironically it’s essentially the same leap of faith Obama is taking in his signature health care program for nonseniors—the view that an adequately regulated, subsidized system of private insurance plans can provide reasonable coverage at reasonable cost.

Indeed, while at a superficial level there’s a sharp philosophical contrast here between the GOP’s faith in the private sector and Obama’s faith in bureaucratic management in fact but in fact both approaches rely on effective central planning. To make the vouchers work, regulators need to adjust the value of each person’s voucher for age and health status and need to define a minimum acceptable benefits package. Regulators capable of doing that well should also be capable of effectively managing a government-run program and vice versa.

The real difference between the two plans is subtle and relatively small compared to the point of consensus.

I found Matt’s column particularly noteworthy as the Center for American Progress Action Fund’s new critique of the Romney-Ryan approach to Medicare reform makes no reference to the Obama administration’s embrace of a cap on the growth of Medicare expenditures.

On a tangential note, I don’t believe that the Romney-Ryan ticket has not explicitly endorsed the Wyden-Ryan cap, which is perhaps best seen as an instrument designed to yield a favorable CBO score. The CBO can’t be expected to score the dynamic effects of competition or the rise of accountable care organizations. This is one reason why I take the caps embraced by Democrats and Republicans with a grain of salt. Once the cap proves binding, it is hard to imagine Congress taking stringent measures to keep it in place.

The center-left has plenty of ammunition it can bring to bear against the Romney-Ryan fiscal vision. The most powerful arguments center on the fact that a Romney-Ryan administration would almost certainly have to pursue deep reductions in Medicare expenditures very quickly if to reduce deficits dramatically without increasing taxes — reductions that might not prove politically sustainable. But Democrats and progressives have for the most part chosen not to fight on this terrain, focusing instead on Medicare reform. 



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