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Ryan’s plan starts to wilt

<od to see that maybe there is some sanity in the political world. Although for 99% of the time Washington gives us all evidence to the contrary, the apparent failure of Paul Ryan’s proposed Medicare reforms, having been questioned or attacked by people on both sides of the aisle, suggests that the one percent does exist.

To understand why Ryan’s plan was so nuts, lets revisit the situation and what Ryan actually wanted to do. Medicare’s rising costs pose one of the largest problems to the government’s long-term fiscal health. Since health care costs across the system are rising at a rapid rate, Medicare’s costs are naturally on a similar trajectory.

There are two general approaches to trying to get costs under control. One is to transform the way that health care is delivered. In general, our system is great at treating people who already have an ailment, but isn’t great at preventing them. One way of changing how care is delivered is by increasing preventive care. Another idea is to change payment systems to ones that pay for health outcomes rather than the number of procedures or tests conducted. This could dramatically decrease the amount of unnecessary care that is currently given.

The other approach is more market oriented, one that Paul Ryan takes to the extremes, which is to shift the costs of health care more onto patients. The belief behind this idea is that by exposing patients more and more to the costs of their health care, they will demand less, the hope being that this would incentivize health care professionals to find new efficiencies and cheapen costs overall. The way this would be done in Medicare is by capping the program’s amount of spending. You can do this by either capping what the government will spend on insurance, or converting the program to a voucher program where seniors buy private insurance themselves, with the government capping the worth of those vouchers. By knowing that allowing spending to cross a certain point would increase costs to patients, those patients would then theoretically learn how to use less care.

Now, there are legitimate parts of this approach to be sure. Some of the reason costs have risen so much is because people demand more than they need. Insurance creates some moral hazard as people are shielded from the costs of their health care decisions. Exposing them to some of these costs would be a good thing to do.

Both approaches need to be utilized simultaneously. What Paul Ryan does, however, is completely ignore reforms to the delivery of health care. He simply relies on the market to squeeze out inefficiencies, and he does it in the wrong way.

On the surface it isn’t an evil plan so much as just an ineffective one; there do need to be actual legislative reforms to health care, not just insurance. What makes Ryan’s plan horrible is that he links the vouchers that seniors would receive for insurance to inflation, with the problem being that health care spending rises more than double that rate. The plan would essentially result in Seniors being exposed to too much of the costs, so much so that incomes end up determining what care people can receive.

Fortunately, this week we started to see the plan die. Newt Gingrich, showing that he isn’t completely insane, just politically, said on Meet the Press, “I don’t think right-wing social engineering is any more desirable than left-wing social engineering. I don’t think imposing radical change from the right or the left is a very good way for a free society to operate. I think we need a national conversation to get to a better Medicare system with more choices for seniors…” Many conservatives subsequently scolded Gingrich. Rush Limbaugh said it “cut Paul Ryan off at the knees.” Another scolding happened in an awesome confrontation between an activist and Gingrich, where the activist said, “What you just did to Paul Ryan is unforgivable… You undercut him and his allies in the House…You’re an embarrassment to our Party. Why don’t you get out before you make a bigger fool of yourself?”

But it was Gingrich who was on to something. For instance, John Boehner has begun to admit that large changes to Medicare would probably not be involved in the debt ceiling negotiations as Democrats have successfully excoriated Ryan and other Republicans for such a radical plan. Perhaps the bigger move though was a major speech Paul Ryan gave this week that seemed to walk farther away from the details of his plan. As Ezra Klein of the Washington Post wrote, the speech included little in the way of details about his plan for Medicare, talking about Taxes over than 3 times more.

Overall, there are two pretty comforting things about these developments. One is that they signify Democrats’ success with going on offense. After having to defend against Republican attacks during the health care reform effort, it is good to see that they can fight back adequately. The other is that the weakening of Ryan’s plan signifies the existence of one percent of sanity in Michele Bachmann, as she so presciently remarked weeks ago that she had concerns about the cost shifting in Ryan’s proposal. One percent is better than no percent, right? At least it’s a start.

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