The Republican Plan

The Baseline Scenario has a three part analysis of the Republican deficit reduction and healthcare plan. It's really worth reading all three but here are some outtakes.

The Republican Plan, I: People Will Die. "Ryan realizes that “the deficit problem is a health-care problem,” which he agreed to in an interview with Klein. That’s good. He realizes that to solve the deficit you have to do something about Medicare. That’s good. He also puts forward a logically coherent conservative position. That’s good in itself and especially refreshing after the Bush era (and the unfunded Medicare prescription drug benefit) and all the recent posturing of the Republicans as defenders of Medicare (Mitch McConnell: “Cutting Medicare is not what Americans want.“) Ryan’s plan is basically to cut Medicare like never imagined before."

"The Roadmap takes the opposite approach: it puts all the risk of rising health care costs on beneficiaries. In concept, it takes the current amount that the government spends on Medicare and turns that into vouchers that are distributed to individual beneficiaries, who are then free to buy whatever health insurance they can in the free market. The vouchers are designed to grow slower than equivalent insurance would cost"

The Republican Plan, II: You’re On Your Own. "But, Paul Ryan would argue, the Roadmap is going to bring down the cost of health care, so the fact that we’re providing less support won’t matter. Put another way, he might say, Obama’s plan also counts on bringing down the cost of health care, so why can’t I make the same assumption? There are two problems with this argument."

"The Roadmap pins cost reduction on one thing, and one thing only: eliminating the tax exclusion on employer-provided health care. I think this is a good idea, and I suspect that Peter Orszag does, too, but couldn’t push it through for political reasons. But the idea that it’s going to solve the health care cost problem alone is the kind of fantasy people have when they’ve only taken one semester of high-school economics and think the world works just like textbooks."

"In the Democratic plan, if it turns out health care costs don’t fall as fast as they hope, the deficits stay high and they try again. In the Republican plan, deficits fall and people die. In one case, the government budget bears the risk; in the other case, ordinary people bear the risk."

The Republican Plan, III: Comic Relief. "The Roadmap brings up the issue that there is little price transparency in the health care market." Their solution is modeled on SEC and FASB since 1973, that is self-regulation. "Enron? WorldCom? Self-regulation? FASB, the SEC, and the securities industry are their example?"

James Kwak began his posts saying, "The CBO says that it will balance the budget and even eliminate the national debt by 2080. Ezra Klein and Matt Yglesias have commented on it. Klein says, “I wouldn’t balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. . . . But his proposal is among the few I’ve seen that’s willing to propose solutions in proportion to the problem.” Yglesias says “it’s totally unworkable.” But they’re both being much too kind."