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Lieberman’s Plan to Save Medicare



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As the debate over how to preserve Medicare hardens into gridlock — with Paul Ryan’s “premium support” plan on one side and President Obama’s “don’t worry, my ‘panel of experts’ will take care of it” approach on the other — Sen. Joe Lieberman (I., Conn.) is trying to find some middle ground. He outlines his plan in a Washington Post op-ed: “How Medicare can be saved.”

Medicare is “hurtling toward its demise,” Lieberman writes. But instead of working together toward a solution, lawmakers are “busy posturing for the next election” and have turned the issue “into another excuse for partisan pugilism.” Indeed, Lieberman seems to chide Democrats for their failure to take Medicare’s funding crisis seriously. His implied criticisms of the Republican approach — that it would “privatize” Medicare — come off as forced, not least because they are simply false (the Ryan plan does no such thing).

Lieberman’s plan, which he is drafting into legislation, will save “at least $200 billion” over the next decade and extend Medicare’s solvency by about 20 years. Here’s how he proposes to do it:

  1. Raise the Medicare eligibility age. Lieberman proposes, starting in 2014, to gradually raise the eligibility age from 65 to 67 by 2025 (a rate of two months per year). “That’s a small sacrifice to ask for the benefits you will receive from a healthy Medicare program for the rest of your life,” he writes.
  2. Reform the benefit structure. Essentially, he wants to simplify the “complex Medicare benefit structure” by combining the Part A and Part B deductibles, requiring a co-pay on all Medicare services while imposing a limit to the amount of out-of-pocket costs seniors must pay in a given year.
  3. Reform the premium structure by raising premiums for all new Medicare recipients in Part B and Part D from 25 percent to 35 percent, beginning in 2014.
  4. Change the rules for ‘Medigap’ coverage. Lieberman points out that Medicare patients with supplemental coverage use substantially more services that traditional Medicare enrollees, which drives up overall costs. He doesn’t, however, propose a solution to the problem.
  5. Raise revenue by imposing a 1 percent surtax on personal income over $250,000 to go towards saving Medicare.

Note that Lieberman’s plan, like Obama’s “plan,” would impose changes on current seniors, starting in 2014, in marked contrast to the Ryan plan which preserves Medicare in its current form until 2022. In fact, the Lieberman’s proposal is in a way quite similar to what House Minority Leader Nancy Pelosi (D., Calif.) has proposed, which is to do nothing (“We have a plan. It’s called Medicare.”). The changes Lieberman recommends are exactly the sort of emergency measures a “panel of experts” would be forced to impose — within the framework of the current system — in the midst of a debt crisis. This is precisely the scenario that Ryan’s plan aims to prevent. As Yuval Levin writes in The Weekly Standard, given the likely alternatives, Ryan’s plan is anything but radical. Lieberman’s proposal highlights the clear choice facing American voters regarding how Medicare can be preserved: Cut benefits now or wait 10 years? Control costs through rationing or market forces? Extend solvency for 20 years or permanently? Do it by raising taxes or not? 

Aside from the part about higher taxes, Lieberman’s ideas are not going to excite many liberals. As such, it also indicates the extent to which the Left is becoming increasingly isolated in the debate over entitlements. By forcing the issue, Ryan has provided cover for sensible Democrats like Lieberman to admit what everyone knows to be true: Medicare “as we know it” is unsustainable. For example, see Democratic pollster Charlie Cook’s column in today’s National Journal, Too Good To Last.” Most realize that fixing this would be the most meaningful action Congress could take to reassure financial markets that the United States is serious about confronting its long-term debt problem. Even President Obama has been forced to admit as much. Of course, the Nancy Pelosi/Harry Reid faction of the party will be content to demagogue all the way to November 2012, but Lieberman’s effort is perhaps a sign of political momentum on the side of fiscal seriousness when it comes to Medicare. Then again, there’s a reason Lieberman was forced to leave the Democratic Party, and he doesn’t have to run for reelection.



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