(Centennial Fellow) The Democrats want to scare the elderly to death about Paul Ryan's Medicare proposals even though they won't affect anyone over 54. And here's what they're not telling anyone: Their own legislative mishaps include billions in cuts that start eating away at Medicare right around the corner and won't address the debt threat because of the coming costs of Obamacare.
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It's true, and it's getting surprising little press attention as Ryan on the stump is already showing why he was a brilliant choice by Mitt Romney to run as the Republican vice presidential candidate with him. He is addressing not some picayune issue, but what ought to be everyone's chief domestic dread: a gross national debt getting close to $16 trillion. It's already slowing economic growth by the calculations of some and threatens calamity if something significant is not done about it.
Ryan, as a Republican representative from Wisconsin, has made deficit reductions one of his chief objectives as he has fashioned GOP budget plans taking seriously the warnings from the leaders of President Barack Obama's own debt commission, the National Commission on Fiscal Responsibility and Reform. He gets it that entitlements could eventually consume virtually the whole budget if left untouched, and came up with a Medicare voucher plan that would treat the least advantaged with the most care as it also introduces market principles to help keep health costs in check.
He would also give people the option of sticking with traditional Medicare, although he would slow its growth by changing the formula for increasing expenditures.
The Democratic approach in the Obamacare package is different. One way it aims to control costs is by reducing fees paid to medical providers beginning next year, thereby almost surely reducing the number of providers who will take on Medicare patients. Savings of this and other steps are said by the Congressional Budget Office to amount to $716 billion over 10 years, which might seem a debt solution if it were not for the new Obamacare entitlement adding multi-billions more to federal expenses.
The probability is that we're "going over the fiscal cliff," Erskine Bowles told CNBC in a July interview, and he's not some right-wing hack. He is the former chief of staff for President Bill Clinton and co-chairman of the debt commission. He said the commissioners "worked hard to try to get common sense to overrule politics, and that's a tough thing in Washington, as all can tell you."
Except, it seems, when it comes to Ryan. Although Bowles and the other co-chairman, former GOP Sen. Alan Simpson of Wyoming, have found things to fault in Ryan's formulations, they have also praised them, saying a year ago that his budget ideas were a "serious, honest, straightforward approach to addressing our nation's enormous fiscal challenges" and would "reduce the country's deficit by approximately the same amount as the plan of the President's Fiscal Commission."
Obama is out on the stump saying he has a different vision, and indeed he does – a vision that would keep spending, spending, spending and would raise taxes on some to little budgetary avail while possibly hurting the recovery even more than he has already. Keep going forward at his rate of a trillion-dollar deficit here and another trillion-dollar deficit there, and pretty soon we are over the cliff referred to by Bowles.
If anything should induce fear and trembling, it's that prospect, not Ryan's perfectly reasonable Medicare proposals that truly do aim to reduce spending for the reason that there is no other choice if we want to save the program and the country. The point that should not be lost is that he aims to do it in a way that gives those affected plenty of time to prepare, gives special attention to those most in need and has figured out a method that should enable the program to thrive.
Jay Ambrose, formerly editor of the late, lamented Rocky Mountain News and other major dailies, is now a syndicated columnist for Scripps Howard and a Centennial Institute Fellow.
(Regis Student) In an arrogant display on Christmas Eve morning, the U.S. Senate gave the American people a big, dark piece of coal when it passed a massive healthcare package that simply does not address the primary problem with our system: skyrocketing costs.
According to the non-partisan Congressional Budget Office, premiums would rise by as much as $2,000 for a family policy. The government’s Centers for Medicare and Medicaid Services assert a 5.1 percent increase in healthcare-to-GDP spending (to 21.1 percent, currently 16 percent) with reform compared to a 4.8 percent increase by doing nothing. And for those under 30, premiums could rise by 50 or 60 percent, according to Robert Zirkelbach of America’s Health Insurance Plans.
Congress should just scrap their big-government healthcare schemes and instead adopt the “Capitalist Manifesto for Healthcare Reform,” several specific, free-market fixes for healthcare. With two previous articles in this series, I proposed several cost-cutting initiatives: increasing competition for individual consumers and permitting it across state lines, decreasing pharmeceutical regulation and permitting the importation of prescription drugs.
Now, in the final installment, we will examine lowering costs by freeing up medical malpractice, the regulatory system and Medicare and Medicaid, all critical reform components.
Reforming Medical Malpractice: If you’re a doctor, you better have malpractice insurance. Otherwise, you’re taking a huge risk. No matter what happens, even if a doctor does her job right and everything turns out well, you’re in danger of a class action lawsuit, known as “tort.”
According to Dr. Russell Turk, “[A] September survey of more than 5,000 obstetricians/gynecologists conducted by the American College of Obstetricians and Gynecologists' (ACOG) [found that] in Florida, the state with the highest premiums, ob/gyns pay an average of $195,000 annually…The ACOG survey found that 63 percent of ob/gyns report making changes to their practice due to the fear of liability claims or litigation. In addition, 8 percent said they had stopped practicing obstetrics altogether.”
Doctors across the country are in such risk of getting hit with a massive lawsuit that their costs in malpractice insurance are astronomical. I agree with Dr. Turk when he says, “I fully support the idea of doctors being penalized and disciplined when they have been negligent. But you can do everything right and still get sued for a poor outcome.” As he notes, this also affects how doctors practice medicine, like what risks they’re willing to take to save lives.
Medical malpractice concerns also encourage greater use of defensive medicine, meaning doctors conduct tests they wouldn’t otherwise do to prevent lawsuits. In fact, defensive medicine costs the system an estimated $70 billion a year. Doctors should neither be prevented from doing what is necessary to serve their patients, nor forced into doing what is unnecessary and costly, just to protect themselves.
Tort reform, therefore, is absolutely essential for doctors, which will in turn pass on lower costs to consumers and insurance companies. It is imperative that punitive awards for medical malpractice be capped. In addition, those things for which one can go to court to seek damages should be reexamined and limited somewhat to prevent the application of inappropriate pressure on doctors from doing what may really be necessary to serve the needs of their patients.
However, the reforms that are necessary to lower costs and doctors’ concerns cannot all be undertaken at the federal level, due to federalism. Therefore, there are actions that must be taken at the federal and state levels, and the feds should perhaps consider providing incentives to states to do their part. It is imperative that, as part of a comprehensive healthcare reform package, both levels of government begin taking steps to reform the oppressive tort laws that are strangling the nation’s medical practitioners and pushing costs up.
Don’t Hate; Deregulate: I know what you’re thinking. Deregulation…isn’t that what got us into financial crisis in the first place? In fact, as economist Walter Williams points out, “In the banking and finance industries [from which the crisis stems], regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.”
Economist Jeffrey Friedman noted, “The financial crisis was caused by the complex, constantly growing web of regulations designed to constrain and redirect modern capitalism. This complexity made investors, bankers and perhaps regulators themselves ignorant of regulations previously promulgated across decades and in different ‘fields’ of regulation.”
Deregulation was not the real cause of the financial crisis; regulation was. Furthermore, the healthcare and financial sectors are entirely different in nature, and the fact of the matter is, healthcare is one of the most heavily regulated industries in the country. According to Duke University’s Chris Conover, a policy analyst at the Cato Institute, the net cost of health regulation is $169 billion a year, after subtracting beneficial regulatory costs. As with any industry, in order to pay for the dictates of the government, institutions of health are forced to raise costs, which extends to consumers in the form of higher prices—a whopping $1,500 per household in this case.
Bear in mind that the regulations I’m talking about are not your essential safety regulations, but $169 billion in excessive, burdensome regulations, like the tort system, FDA regulations like those addressed in Column #2 and regulation of health facilities.
In fact, Conover’s research has shown that while roughly 18,000 Americans die from lack of health insurance, 22,000 die due to health services regulation, and seven million uninsured owe their state to excessive regulation. Cutting back on those unnecessary and cumbersome, but targeted and non-essential requirements/restrictions at both the federal and state levels would free up the market and enable health providers to lower costs.
Fixing Medicare and Medicaid: Medicare and Medicaid are the two most prominent government-run healthcare programs currently on the books. Medicare provides medical insurance for the elderly, and Medicaid is a massive federal-state partnership affording healthcare to the poor and indigent. While both of these programs are well-intentioned, they are financially unsustainable and require updates for application in a 21st century world.
Medicaid is a drain on federal and state budgets. To help control costs, states should be given near-absolute flexibility in determining how Medicaid is to be doled out—not more money. In fact, how Medicaid funding is given to the states encourages fraud and waste. And both Medicaid and Medicare reimburse doctors at as much as 30 percent below the normal rate—meaning costs are distributed to others. Fraud, abuse, waste and inefficiency need to be identified and cut from both of these programs. Fund distribution methods must be altered, and we must reexamine who is allowed to benefit from them, particularly from Medicare.
We need to start taming the Medicare leviathan, which has $89.3 trillion in unfunded liabilities. The layman’s solution to Medicare lies in allowing qualified individuals to opt out of the program if they so choose; slapping a grandfather clause on the 2003 Medicare Part D prescription drug benefit, meaning that those who are not currently on the program will not receive expansionist Part D benefits; and making Medicare means-tested, meaning that folks like Bill Gates would be ineligible for benefits.
Whether or not a person qualifies for Medicare benefits should rely on several factors, principally income level but perhaps also including yearly expenses, savings and the number of dependents. The switch to a means-tested structure should pertain solely to those who are currently under the age of 50 or 55; that way, all who are already anticipating on entering the Medicare program soon will be able to. The program will slowly work its way down, and the increased cost burden it shifts to the private healthcare industry will shrink as a result.
By taking these three critical steps toward reforming what we've got right now and thereby expanding freedom in the marketplace, we will undoubtedly be able to pull the brakes on skyrocketing healthcare costs as our system speeds on its way to the cliff of no return.
Jimmy Sengenberger is a sophomore at Regis University, where he hosts an Internet radio show and organizes for conservative causes. This is the third in a series of columns proposing specific, free-market alternatives for healthcare. To see the previous installments, click his byline at the top.