Thursday, April 7, 2011

The Hammer on Ryan Blueprint


Let the assault begin.

13 comments:

Patrick_L said...

I don't think I can take someone seriously when they argue Ryan's proposal is revenue-neutral.

I have a question for you Professor Eismeier: Do you agree with Krauthammer when he attributes the 1990's decline in child poverty to the change from AFDC to TANF's block-grants and work requirements? I'm curious

TJE said...

Just sayin:

http://www.nytimes.com/2011/04/08/opinion/08krugman.html

TJE said...

http://www.nationalreview.com/articles/264216/nine-points-about-republican-budget-avik-roy?page=1

Patrick_L said...

I noticed you ignored my initial question- which I’ll take as a good sign that you know Krauthammer was dead wrong with his statement on welfare reform through block grants and work requirements being a social policy success because it reduced child poverty. It’s really sad that so many conservatives continue to utter this falsehood- and that they use it to justify Ryan’s proposed Medicaid and SNAP block grant proposals.

Moving onto Ryan’s budget proposal, what do you actually find problematic in Krugman’s editorial- besides that it’s written by Krugman? Do you disagree that Ryan’s budget relies on voodoo economics? Or do you agree with the Heritage projections that Ryan’s budget would create a housing boom (should be called a bubble since we already have excess capacity), nearly one million additional jobs from the current projections in 2012 alone, and lead to a 2.8% unemployment rate by 2021? Do you think that tax cuts pay for themselves? Do you disagree that Ryan’s budget is drastic when he proposes to reduce everything the governments does besides Social Security/Medicare/Medicaid/CHIP to 3.5% of GDP by 2050 from its current level of 12% of GDP or down from the 9% CBO projects under the alternative fiscal scenario? This area of the budget includes defense and national security, which is currently greater than 3.5% of GDP and since 1940 has equaled or exceeded 3 percent of GDP every single year. Do you think it’s drastic that Ryan’s budget calls for essentially eliminating everything the government does besides defense and the major entitlement programs? Do you disagree with Krugman when he says: “The point here is that privatizing Medicare does nothing, in itself, to limit health-care costs. In fact, it almost surely raises them by adding a layer of middlemen.” Conservative economists like Tyler Cowen, libertarian economist who serves as general director of the Mercatus Center, agree with Krugman’s first statement (see below for more details on this), and the CBO agrees with the second. Do you disagree that most of the savings from Ryan’s spending cuts go to paying for Ryan’s tax cuts? Because that’s what the CBO finds. I can continue this line of questioning if necessary.

Moving onto the National Review article, Avik Roy tries to argue that since other countries (fyi- all of them using single-payer, strictly regulated multi-payer, or nationalized systems) have low health care costs, Ryan’s plan won’t be a disaster because other countries get away with low per person health care expenditures. What does Ryan’s plan have on health care? Vouchers for Medicare and block grants for Medicaid. All that Ryan does is dramatically shift costs from the government to the elderly who will enter Medicare after 2022. He does NOTHING to control health care costs or reform the system. What does Tyler Cowen, libertarian economist and general director of the Mercatus Center, have to say on these ideas and Ryan’s other health care decisions? “The vouchers idea won’t help cut health care costs.” “Ryan’s budget repeals ACA and thus in the semi-short run it could considerably increase Medicare costs.” “That means a fixed value voucher loses about half its real value, in terms of command over health care resources, within fourteen years. (It’s a bit more complicated than that, since not all health care costs are proportional price increases to currently available services.) If that is the decision we are going to make, let us understand it as such.” “Medicaid should be one of the last parts of the health care budget to cut.”

Patrick_L said...

Avik Roy is also wrong when he talks about Switzerland. It is not an example of a successful consumer-driven health care model. As I pointed out yesterday, Switzerland relies on an individual mandate with harsh compliance penalties, the government defining a standard insurance benefit, an extensive federal government system of price regulation, largely preventing variation in premiums by age, requiring insurers to be “not-for-profits,” and regulating which procedures, treatments, drugs, and tests are covered by insurance by taking into consideration value for costs. In addition, Switzerland’s system is far more expensive as a % of their GDP (the relevant measure) than what you find in other countries’ models that completely ignore consumer-driven health care. Why do conservatives always conveniently forget these elements critical to the success of Switzerland’s health care system (compared to our own- since other European countries arguably have better systems)? Britain and Canada do not severely ration care, and Roy conveniently forgets to discuss ALL of the other successful European models which have better results with more government involvement than Switzerland, which in-turn has more government involvement than the U.S.

Isn’t Avik concerned by the fact that the health of individuals with certain chronic illnesses included in the RAND HIE was harmed by increased cost sharing? The RAND HIE did not include the elderly, but more recent work here http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971606 has shown that increased cost sharing for Medicare beneficiaries can lead to adverse outcomes and doesn’t necessarily save taxpayers money.

Isn’t it deliciously ironic that Roy says- as a critique of our current system- that we currently have a hodgepodge of programs including “Obamacare exchanges for people of lower-to-middle incomes who are too wealthy for Medicaid?” Isn’t he talking about practically the same thing Ryan is doing with Medicare? So shouldn’t they be called Obama/Ryan-care exchanges? (Of course, nearly all health economists would agree that these exchanges are actually far less likely to be useful for insuring elderly people because of the greater adverse selection risks). He also promotes how Ryan allows for more choice- neglecting to point out that Ryan gives people no choice when he kicks them off traditional Medicare. Alice Rivlin would have allowed them to remain on the program while still controlling costs at the original levels of growth she had agreed to with Ryan, although Ryan has dramatically cut from even those levels to a level so low many economists are questioning whether it’s even possible or sustainable, let alone politically feasible since new Medicare beneficiaries will be able to see just HOW MUCH BETTER OFF Medicare beneficiaries are who are just several years older than them.

Patrick_L said...

Avik is also wrong when he tries to argue that block-grants will allow states to find the most efficient way to structure Medicaid for their residents, and that this will have any significant impact on health expenditures. The CBO has thrown cold-water on this, as have nearly all respected health economists- including conservative ones. States are not going to be able to find enough efficiencies to offset the dramatic pullout of federal funds, which will necessitate states cutting critical benefits (remember that most Medicaid costs go for elderly and disabled care), cutting enrollees, cutting provider payments and worsening the access problem, and cutting the quality of health care Medicaid beneficiaries receive over being uninsured. Isn’t Avik concerned that the evidence shows there is a cost in health to less generous insurance, particularly for vulnerable populations enrolled in public programs? (http://www.nejm.org/doi/full/10.1056/NEJMp1103168) Medicaid is not failing the poor on an epic scale, and the reforms Republican governors would enact if given Medicaid block grants would only worsen the situation.

Roy next discusses Medicaid fraud and neglects to point out that reducing fraud would require spending more money than states do now on this project, reducing how much savings you could get on this measure. The definition of “fraud” is quite large and hard to eliminate- there are also declining returns to how much Medicaid fraud you can prevent with increased fraud prevention and monitoring activities that require spending money. He also neglects to point out that “fraud” levels are similar across all types of health care programs, including private insurance.

Avik then discusses how Ryan’s plan will increase cost-sharing in Medicare for more wealthy recipients which will increase the progressivity of the program and actually provide an example of one place where Ryan’s proposal places a heavier burden on high-income Americans. Avik forgets that Medicare expenses, like all health care spending, is incredibly concentrated in a small percentage of patients who are very sick, and often dying. There health care bills are huge- millionaires could find their entire fortunes exhausted in just several months- let alone over the many years they may be enrolled in the program. While some increased cost-sharing for higher-income individuals and households, there are limits Since Ryan’s plan does nothing to actually reform health care- just restructuring the finances of the government programs- he will not bend the cost-curve or reduce health costs for the program. There will be no significant decline in health care costs, which means the modest amount of variation you physically could structure a Medicare to include (giving the wealthiest Medicare beneficiaries $0 in subsides and giving the poorest beneficiaries the full subsidy of a few thousand dollars), would hardly make the program strongly progressive since there are such huge variations in income across households. Roy also fails to discuss how difficult, some say impossible, it is to successfully risk-adjust voucher payments for illness status. There will always be significant variation- with some people getting far more in subsidies than they deserve considering their health status and some getting far less than they need.

Patrick_L said...

Ryan’s budget is not brave, unless it’s brave to use spending cuts from programs that benefit low-income families to pay for tax cuts that favor the rich. Ryan’s budget is not brave, unless it’s brave to do nothing about health care costs while shifting costs and risk dramatically to the elderly and disabled (so much so that for most it will consume over half of their income)? The same elderly and disabled people who have very little control over their incomes or health, which prevents them from even trying to manage that risk. Elderly, disabled, and poor people who studies have shown suffer worse health outcomes as a result of increased cost-sharing. Maybe Heritage could move on policy analysis and try to rewrite the dictionary- then I could see how the word “brave” might be used to describe Ryan’s plan.

If anyone deserves to be criticized, it’s Krauthammer for his repeated inability to stick the facts. If Krauthammer wants to accuse people of demagoguery, he should first check a dictionary for the word's definition and realize that it’s his body of work that qualifies for the label. While he’s at it, he might want to look up the word hypocrite.

TJE said...

Mr. L, I posted Hammer and Krugman without comment to be fair and balanced.

I read Hammer to be saying that TANF was not the social calamity some predicted. As I read CBPP, reasons for decline in child poverty were complex. Even if TANF was not primary cause, it could be a partial success.

Patrick_L said...

Posting opposing viewpoints isn’t fair and balanced when one side clearly has trouble with the facts and the other does not. Sometimes one side is just factually incorrect, and it’s not “balanced” to give them a platform when they are so clearly wrong or misinformed.

TJE said...

"Anyone who thinks they have a monopoly on truth, and there is only one way to see the world, always gets us into trouble."
Charles Schumer (a great American)

TJE said...

http://prospect.org/cs/articles?article=fiscal_responsibility_on_the_backs_of_the_poor

TJE said...

http://www.weeklystandard.com/articles/radical-gradualism-paul-ryan_557012.html

Patrick_L said...

http://taxvox.taxpolicycenter.org/2011/04/12/ryan%e2%80%99s-tax-plan-is-not-1986-style-reform/