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Friday, August 13, 2010

Social Insurance and the Washington Post

The Washington Post gives Paul Ryan space on its op-ed pages to present an idea to reform Medicare that is not new -- it is little more than the voucher proposal from Newt Ginrich in 1995 -- and that is full of inaccuracies. The proposal, if implemented, would dismantle Medicare as we know it, but it does not solve the main underlying issue driving future budget problems, the growth in medical costs. Instead, it cuts benefits substantially. As Paul Krugman states, "we already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system. The only way the Ryan plan could save money would be by making those vouchers too small to pay for adequate coverage."

Dean Baker lists 20 inaccuracies in the Ryan op-ed:

Fun With Paul Ryan and the Washington Post, by Dean Baker: The Washington Post really really hates Social Security. They hate Medicare almost as much. Therefore they are willing to give its critics space to say almost anything against the program (the real cause of September 11th) no matter how much they have to twist reality to make their case.
Today, Republican Representative Paul Ryan stepped up to the plate. The Post felt the need to give him an op-ed column after Paul Krugman cruelly subjected Mr. Ryan's "Roadmap for America's Future" to a serious analysis last week. This violated the long accepted practice in elite Washington circles of not holding proponents of Social Security and Medicare cuts/privatization accountable for the things they say. It is therefore understandable the Post would quickly give a coveted op-ed slot to Mr. Ryan to make amends for such a grievous breach of protocol.
The rest of us may not have the power to invent the facts that would be needed to push our policies, but that doesn't mean we can't have fun. Let's count the inaccuracies (they call them something else outside of DC) in Mr. Ryan's piece.
...11 and 12) ...Ryan tells us: "the Democrats' political machine has attacked my contribution to this debate, making the false claim that the only solution put forward to save Medicare would "end Medicare as we know it."
The main attacker of Ryan is Paul Krugman. Krugman is very far from being part of the "Democrats' political machine." In fact, he is almost certainly the prime embodiment of the "professional left" recently criticized by White House spokesperson Robert Gibbs.
Of course Ryan's plan would end Medicare as we know it. It replaces a Medicare system that pays directly for health care with a voucher system. The voucher is explicitly designed not to keep pace with health care costs. Ryan describes the rate of increase in the size of the voucher as "a blended rate of the CPI and the medical care component of the CPI." In other words, something less than the rate of increase in health care costs. It is also means-tested, so that individuals with incomes above $80,000 would see their voucher cut in half (we might see a lot of people earning $79,999 under the Ryan plan) and those with incomes over $200,000 would not get the voucher.
13 and 14) In the next paragraph Ryan boasts that his Medicare cuts (raids?) would maintain the program's solvency: "while reforming the program to ensure it will be there for younger generations. Future seniors would have access to the same coverage I enjoy as a congressman." ... "Far from the claims of "radicalism," this proposal is based on a key reform from the National Bipartisan Commission on the Future of Medicare, chaired by then-Sen. John Breaux (D-La.). That commission in 1999 recommended "modeling a system on the one Members of Congress use to obtain health care coverage for themselves and their families."
Ryan's Medicare voucher might be a voucher system in the same way that a Yugo and a BMW are both cars, but there is absolutely nothing about Ryan's proposal that ensures Medicare beneficiaries the same quality of care as members of Congress.
16) Ryan then describes his Medicare voucher: "The Medicare payment would grow every year..."
Actually, the payment is explicitly designed to fall behind the rate of medical care cost inflation. ...
19) Ryan continues: "Under an ever-expansive, all-consuming central government, costs will be contained with Washington's heavy hand imposing price controls, slashing benefits and arbitrarily rationing seniors' care."
Actually no one has raised the issue of rationing in any context. President Obama's plan will limit the procedures for which the government will pay, as is currently the case with Medicare. However, there is nothing that President Obama has put forward that would do anything to prevent people from getting whatever care they are willing to pay for. Apparently the word "rationing" scores well in focus groups, which is why Ryan and other Republicans use it frequently in their attacks. ...
Ryan concludes by telling readers that his proposal is "my sincere attempt to break the political paralysis on entitlement reform, to show that this challenge can be met -- mathematically and politically -- and to challenge those who disagree with my proposal to offer their own."
In the forgiving spirit of Friday the 13th, I will not count the reference to sincerity as an inaccuracy. The 20 inaccuracies and 4 references to raiding Medicare can speak for themselves. Of course to the seniors who would be unable to afford decent health care if Mr. Ryan's plan became law, his sincerity won't make any difference. ...

That's not flimflam?

The tactic of accusing the other side of raiding a program the he intends to essentially dismantle through a voucher program that cuts benefits (and, notably, does not address the underlying the cost growth problem) is a well worn tactic from Republicans -- put the other side on the defensive by accusing them of doing what you intend to do yourself -- and they'll continue using it so long as the press gives them a free pass, even lauds them, for their efforts. I wouldn't have thought that such a dishonest approach was possible, but recent charges of "death panels" and the like from the Party that has worked hard to end, reduce, or substantially alter social insurance caused me to change my view.

Update: Brad DeLong comments on the Ryan op-ed.

Update: The EPI defends itself against charges appearing in an op-ed in the Washington Post. The topic here is Social Security:

Washington Post gets it wrong on Social Security, Lawrence Mishel: A recent editorial in The Washington Post [“Whatever the deniers say, Social Security needs reform soon”], painted the Economic Policy Institute as a Social Security “denialist” with a negative view of President Obama's National Commission on Fiscal Responsibility and Reform.
EPI certainly does not deny that there are long-term imbalances in the federal budget: passage of the Bush tax cuts and the prosecution of two protracted wars created serious problems even before the Great Recession put 15 million people out of work and dramatically reduced federal revenues. The key spending issues in the long term are rising health care costs and a lack of revenue, not Social Security.
The Post’s suggestion that EPI bears some ill will toward the Fiscal Commission is simply not true. While we do have differences with many of the views expressed by some individual members of the commission, which are highlighted in our recent report, “Social Security and the Federal Deficit,” EPI has never denigrated the commission’s efforts. ...
Nor do we deny that Social Security has a long-term imbalance. But it is emphatically not the cause of the federal government’s long-term deficits, since it is prohibited from borrowing and must pay all benefits out of dedicated tax revenues and savings in its trust funds. The editorial itself concedes that “Social Security is not a cause of the current or future debt.” We wonder, however, why this is then followed by the non sequitur, “but putting it on a sustainable footing is essential to getting the nation's fiscal house in order.” In that same spirit we wonder why there’s so much focus on “fixing” Social Security in the discussion around the President’s deficit commission since, after all, Social Security is “not a cause of the current or future debt.” ...
The “when and how” we address the deficit problem really matters... How soon we start addressing deficits is vitally connected to the state of the economy, and we believe that no deficit reduction should take place before unemployment is at or below 6.0% for six months. How we address the longer term budget challenge is vitally linked to what type of nation we want and what our priorities are: it is not simply a matter of choosing some spending to cut or some revenues to raise. Retirement and Social Security are a case in point. We need to start by acknowledging that retirement insecurity has risen for two reasons: (1) personal wealth has been severely diminished as stock and housing wealth plummeted; and (2) the employer-provided pension system has weakened as fewer employees are provided guaranteed benefits. The challenge then is to address Social Security’s shortfall while meaningfully improving retirement security, an approach we wish The Washington Post would take.

Paul Krugman also comments on the calls to "reform" Social Security. Update: More from Krugman.

    Posted by on Friday, August 13, 2010 at 10:45 AM in Budget Deficit, Economics, Health Care, Social Insurance | Permalink  Comments (75)


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