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Ryan and Obama Plans Share Unworkable Gimmick for Capping Health Care Inflation

Maybe Obama and Ryan should have a beer summit to discuss their health plans. (photo: merfam)

Not only is Republican Paul Ryan’s Medicare privatization plan using basically the same general premium-supported exchange design that Obama’s health care revision does for the uninsured under 65, but both Ryan’s budget and “Obamacare” are nearly totally reliant on almost the same pathetic accounting trick of using poorly indexed caps on federal health care spending in the distant future to produce the bulk of their supposed deficit reductions.

Many elected Democrats and individuals that consider themselves to be to the left of Ryan (Ezra Klein, Alice Rivlin, Matt Yglesias, Jon Cohn) are rightly attacking Ryan’s huge Medicare “savings” as being cruel and/or unrealistic. By 2022, Ryan would turn Medicare into a private voucher program, but the value of the vouchers would only increase annually at the rate of inflation. This is significantly slower than the traditional rate at which health care costs have grown, so it is basically huge cuts ever year in what Medicare would normally have spent. The likely result is that the political outcry would cause a future Congress to raise the voucher amount, eliminating these supposed “savings,” or our seniors in the future start getting dramatically worse and less affordable coverage.

The problem for Democrats and their defenders is that they use a nearly identical accounting gimmick to produce the supposedly huge long-term savings in the Affordable Care Act. Almost all of the long-term savings in ACA come from the excise tax capping how much can be spent tax free on employer-provided insurance starting in 2018. While the limit on how expensive these plans can be starts high, just like the Ryan voucher will start high, the limit is also only indexed to inflation.

It is the same “unrealistic” indexing Ryan’s Medicare Privatizing plan uses. So If you believe Ryan’s long-term Medicare savings are unrealistic because it won’t be politically viable, than you should also feel that the excise tax deficit reductions are meaningless because they won’t be viable. Or Democrats should admit that the ACA will in fact eventually make most under-65 Americans’ health insurance dramatically worse in the same way Ryan’s Medicare plan would for most people over 65.

The problem is that neither party wants to actually deal with the real cost issues in our system, which is that Congress allows the politically well-connected health care industries to dramatically overcharge Americans and the government. Instead, the parties use gimmicks set far in the future to pretend they have plans to reduce the deficit.

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Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at