Ryan on Healthcare

Paul Ryan is getting a lot of attention for his budget plan, including his plan for medicare. I think what he is saying needs to be analyzed and responded to. So here is a good quote from WashtingtonStakeout (hat tip Paul Krugman - I didn't actually know this website).

There are three facts about medicare that you simply can’t dispute: 10,000 seniors are retiring everyday with fewer workers going into the workforce to pay for them; healthcare costs are skyrocketing at about four times the rate of inflation, which threatens medicare’s ability to give affordable care; and number three, the non-partisan experts agree that Medicare is going bankrupt. So Medicare’s status quo is bankruptcy and that threatens healthcare not only for current seniors but obviously for future seniors, so I believe a patient-centered healthcare system — reforms that put the patient at the center of the healthcare system, not the government — are the best for people who need healthcare and they’re best for the economy, and they’re the best way to avert a debt crisis.

To start, let's assume that his three facts are true; I don't see anything I disagree with. But even if all the things he says are true, his solution isn't the only option based on those facts.

If Medicare is going bankrupt, then we have a few options. One is to increase funding. Another is to decrease services - either by cutting spending on the government side, or, as Ryan proposes, by making it a voucher program and underfunding it. My main problem with Ryan's plan is how he describes it; he tries to say that by using vouchers, he won't be underfunding services and that markets will magically bring down prices so that services won't be cut. This is stupid. He is cutting costs by cutting services - plain and simple.

A fourth option would be to keep it government-funded but to change incentives and structures to bring down costs. What is driving increased medical costs is in part an aging population and in part unnecessary services driven by our for-profit, fee-for-service system. Obama's health care plan plays with fixes, but only does so as pilots - afraid to change too much too soon. It is a prudent approach, but it means health care costs won't change very soon - instead all we can expect is that it might bend the curve so that future costs are less than we are projecting.

In retrospect, I think maybe he shouldn't have been so prudent. By taking on health care and only expanding coverage and doing modest pilots on cost-control, he left the door open for conservatives like Ryan to talk about cost control and to propose terrible schemes like consumer choice.

Either way though, the point is that Ryan may be right that Medicare is not on solid footing, but his plan is the least fair, least effective and therefore least desirable option out there.