Paul Ryan will release his budget today, and he has a companion Wall Street Journal op-ed and a shiny YouTube video to go along with it. Ryan says his budget will cut $6.2 trillion over the next decade, but if it’s anything like the other numbers in his plan, that’s a made-up figure. He draws a line straight upward to model the status quo of spending and debt, without anything attached to it. He assumes that stimulus spending will continue for the next 35 years despite no actual legislation calling for it. And there’s this out-of-nowhere stat:
A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage’s analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.
No numbers are given to back this up, presumably because they don’t exist. I’d take any plan that cuts the unemployment rate by more than half in four years, but absolutely no economic proposal believes that can happen. And certainly not one with as much magical thinking as the Ryan budget.
But the biggest lie here is that this budget would somehow protect Medicare and Medicaid. It won’t. It will eliminate Medicare and whittle down Medicaid to the point of uselessness.
But while saving large sums for the federal government, the proposals on Medicaid and Medicare could shift some costs to beneficiaries and to the states.
Under the proposal, Medicaid would be transformed into a block grant, with a lump sum of federal money given to the states to care for low-income people. States would be given more discretion over use of the money than they have under the current federal-state partnership.
For future Medicare beneficiaries — people now under 55 — Mr. Ryan’s proposal calls for the federal government to contribute a specified amount of money toward the premium for private health coverage. Under the traditional Medicare program, the government reimburses doctors and hospitals directly.
That’s a pretty succinct explanation of what the Ryan plan does. It takes a single-payer Medicare program and privatizes it, when every study in the world has shown that Medicare is cheaper. And the increased costs and more all get pushed onto the individual senior citizen. You get a voucher to buy private health insurance, which as a 65 year-old will be extremely costly. The voucher doesn’t cover the insurance? Tough, be a smart shopper. And the voucher reduces in real value over time, only increasing by GDP+1 annually, less than half of the actual increase in health care costs.
As for Medicaid, block granting will mean that Medicaid funding won’t increase in times of economic stress when there are more poor people seeking help. Medicaid is already so cheap that a lot of doctors won’t take it. This is a blueprint for stopping people from using it; there’s no other way to deal with the cuts. And this idea of “state experimentation” has already been tried.
To get around some of this, Ryan’s op-ed talks about state flexibility, with the implication being that states have some secret Medicaid policies they’ve been dying to try but that the federal government simply hasn’t let them attempt. But the truth is there’s been a tremendous amount of experimentation in Medicaid over recent decades. Indiana converted its Medicaid program into health savings accounts. Tennessee based its program around managed care. Massachusetts folded its Medicaid money into Mitt Romney’s health-care reforms. Oregon tried to rank treatments by value. Some of these reforms have worked well and some haven’t worked at all, but none have solved the basic problem that covering the sick and disabled costs money, and you can’t get around that by trying to redesign their insurance packages. For that reason, block-granting Medicaid ultimately means cutting health-care coverage to the poor, the elderly and the disabled, even as it doesn’t actually address the factors driving costs throughout the health-care system.
The last point is key: there’s no actual reform attached to these plans, which would actually lower US health care costs. The idea is to take government off the hook for those costs, and nothing more. People will have to make up the difference. All Ryan does is shift public debt to private debt.
And that’s before even getting to the fact that the Ryan plan cuts taxes to 25% for the top individual and corporate rate. Throwing people off Medicaid and privatizing Medicare pays for huge tax cuts for the rich.
For providing all this, the official commentariat labels Paul Ryan the most serious, courageous, manly man that has ever strode across Washington. He’s a gutsy fighter, bravely taking on the poor, elderly and infirm on behalf of the downtrodden rich, who have had it too bad for too long. As Kevin Drum says, “A plan dedicated almost entirely to slashing social spending in a country that’s already the stingiest spender in the developed world, while simultaneously cutting taxes on the rich in a country with the lowest tax rates in the developed world — well, what could be more serious than that?”
As Dean Baker notes, if our health care spending were commensurate with the comprehensive health care spending in Germany, Britain or anywhere else in the developed world, we would have no budget problem; in fact, we’d have a surplus. I don’t suspect that to be part of the budget alternative that Democrats will introduce to counter Ryan, but it would be nice if it got mentioned every once in a while. Ryan actually correctly tackles the drivers of the deficit – health care spending. He does so by systematically reducing and eliminating American’s health care. If Republicans want to make that their 2012 platform, so be it.