The Party of Doing Nothing

by Veronique de Rugy

There’s been a lot of talk about what the NY-26 election means for Medicare reform. As Dan Foster noted, Bill Clinton weighed in yesterday and had a pretty good theory about what the Republican loss doesn’t mean. From the NY Times:

“You shouldn’t draw the conclusion that the New York race means that nobody can do anything to slow the rate of Medicare costs. I just don’t agree with that,” Mr. Clinton said at a budget forum sponsored by the Peter G. Peterson Foundation. Instead, he said, “you should draw the conclusion that the people made a judgment that the proposal in the Republican budget is not the right one. I agree with that.”

But Mr. Clinton said he feared that Democrats would conclude “that we shouldn’t do anything.”

I agree with Peter Suderman when he writes that — with a few exceptions — until now most Republicans haven’t been serious and diligent about studying health-care-reform options. It seems to me that they certainly haven’t been serious about studying the Ryan plan. That’s likely a big mistake, since whether they like it or not, this is the plan they have to defend for the next two years, and I think their ability to defend it will determine whether or not they win elections.

Yet, politics aside, Medicare has to be reformed. Anyone who still thinks that the Affordable Care Act has addressed Medicare’s insolvency problem hasn’t looked at the data closely. Based on the trustees’ report, despite a growing share of general revenue going to Medicare spending, the HI program will be insolvent by 2024 and registers $3 trillion in unfunded liabilities. And, of course, there’s only going to be so much money that can actually go to health care, because the economy is unlikely to stomach spending increases of that scale. The question is, how much can the economy stomach before it can’t anymore? When will voters decide that too much other spending is being squeezed out of the budget by health care and say they’ve had enough?

And things will be much worse than they look on paper. On that front, it is hard to underestimate the power of the the letter attached at the end of the Trustees’ report and signed by Richard Foster, the chief actuary of Medicare, explaining that the actuarial assumptions used in the report are unrealistic. As Yuval Levin correctly concludes: “The letter (which starts on page 265 of the document and pretty much makes the prior 264 pages moot) first says that the trustees were compelled to adopt some near-term assumptions that are highly implausible.” He copies a section of the letter:

For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable).

While Democrats disagree with Republicans about how to reform Medicare — as Bill Clinton says he does — they shouldn’t feel that they can just sit on their hands and do nothing. This is especially true in the face of the Trustees’ Report and its conclusion that, even in the best-case scenario, the ACA has failed to address Medicare funding issues. I suspect that this attitude is consistent with the fact that they didn’t pass a budget last year and are about to do it again this year, but it doesn’t make it okay. In the past, Democrats have spent a lot of time making fun of the Republicans for being the Party of No; Democrats are quickly becoming the Party of Doing Nothing.

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