The Corner

Re: So How Are They Going to Reduce the Debt?

Veronique, I have to admit to being a little confused by your post below. Romney and Ryan are running on a very significant Medicare reform, a pretty significant Medicaid reform, a relatively modest Social Security reform, and a mix of tax reform and reductions in domestic-discretionary spending. That’s the core of how they propose to reduce the debt, and as your post suggests that’s what it would take to reduce the debt (especially as Medicare alone accounts for more than 100 percent of the growth in government spending as a share of the economy over the coming decades in CBO’s projections). We obviously can’t know if they would be successful in pursuing these reforms, but you seem to suggest they aren’t even proposing them.

 

It’s true, as you say, that regarding Medicare they propose to “preserve the program for everyone today and tomorrow” and mostly true that they “say that there would be no benefit cuts and/or no increase in the payroll tax, premiums, and other fees that fund the program.” Their reform proposes to have the Medicare benefit provided through an intense competitive process among private insurers and a fee-for-service government insurer starting in 2023—a hybrid of defined-benefit and defined-contribution Medicare that holds out the promise of using the leverage of Medicare’s hundreds of billions of dollars to drive efficiency and value in American health care rather than to drive inefficiency and cost inflation; and such a reform holds out the promise of dramatically reducing the program’s cost. Real competition does seem to have that potential, and if it worked it would dramatically reduce the debt. There would be more means testing in the program, but otherwise they would seek savings by transforming a lumbering bureaucracy of centrally administered pricing into an intensely competitive marketplace. 

 

Is your point that you don’t think markets would work that way, or that you don’t think they would actually push this reform? Do you think Romney could get elected having run on a premium-support reform of Medicare and just never propose it? In any case, you seem to suggest he’s not even running on it. If that’s the case, he’s certainly putting up with an awful lot of political heat for a misunderstanding.

Yuval Levin — Yuval Levin is the editor of National Affairs and a fellow at the Ethics and Public Policy Center.

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