Thursday, June 9, 2011

Where's the plan?

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3 comments:

PL said...

Karl Rove (shockingly!) neglects to mention that Bush was also obligated like Obama to propose Medicare reforms, which he also failed to do. Just like Obama and Bush (and every President except for one slight questionable incident) have ignored the War Powers Act. (It's weird that Rove even brought that one up, considering Bush would easily be considered the worst violater of the War Powers Act. Does he think everyone was born yesterday and forgets the mess his boss Bush left the country with ... on almost every issue you can think of.) Anyways, PPACA is Obama's Medicare reform model. Depending on the timeframe you look at (longer projections PPACA looks better, but there is much more uncertainty that far out), PPACA looks like enough Medicare reform. If Obama wanted to keep the rest of government at levels that Presidents have fluctuated around since the 1970's, its true that revenues would need to expand by several percentage points to keep deficits low while the country grapples with the baby boom. The only way to avoid that is take Ryan's approach to cut most of goverment (non- Social Security, health, and defense) to pre-New Deal levels (actually 19th century levels), and massively shifting costs to seniors (doubling for the typical new Medicare beneficiary in 2022) while bending the nation's health care cost curve up. Personally, I prefer the Obama model which is aggresve on health care, puts nearly all of government on historically normal- if not low- levels, and accepts that even doing all that means that revenues need to rise as the country grapples with the baby boom.

June 9, 2011 at 8:32 PM
TJE said...

Are you sure PL? The law requires a presidential plan when 45% threshold is breached, which did not happen until FY 2010.

http://www.ssa.gov/oact/trsum/index.html

June 10, 2011 at 6:31 AM
PL said...

Turns out I was partly wrong, partly right. I should have looked before I leaped, since I was basing my statement of an article I had read the week before. Anyways, as the link you post to Professor Eismeier states:

"This year’s report projects the difference between outlays and dedicated financing revenues to exceed 45 percent of total Medicare outlays during fiscal year 2011, prompting a determination of "excess general revenue Medicare funding" for the sixth consecutive report, triggering another "Medicare funding warning."

Basically, the first warning was in 2006 so Bush was obligated to respond in 2008. I was wrong however to claim that Bush didn't respond- in fact, he did. He submitted a report that would have increased means-testing in Medicare that would have met the demands of the statute and delayed hitting the 45% threshold. However, his proposal would not have significantly affected Medicare's long-term financial outlook. (Which isn't surprisingly- it takes a lot to noticeably affect the program's massive 75-year problems. For instance, the provisions in PPACA that the Medicare Chief Actuary thinks are unreasonable only close about 25% of the program's total shortfall). Anyways, due to the complexity of the procedures of when this Medicare "trigger" is in effect, this would be the first year Obama was in violation of the provisions and it's requirement that the President assume a quasi-legislative role and provide a policy proposal to push the 45% level outside the seven-year budget window.

Just for information’s' sake, I would note that due to the savings in PPACA (projected or assumed depending on the connotation you prefer), there isn't much left to do to meet the provisions of this statute without either raising the Medicare payroll tax or cutting benefits for current beneficiaries. Paul Ryan's approach, which does represent a major transformation of Medicare to address its shortfall, for instance would most likely not meet the demands of this statute in the kind of response needed to push the 45% threshold outside the seven-year window. (After all, Ryan does nothing to Medicare for the next seven years accept for keeping PPACA's $500 billion or so in savings over the next ten years, which clearly since the trigger was pulled again this year, are insufficient for subduing the trigger).

Anyways, short-story is that these warnings and statute were first triggered under Bush and he did respond with a proposal sufficient to meet the requirements (though dwarfed in scale by PPACA's projected improvements to Medicare's finances, which are in turn significantly smaller than Ryan's improvements to Medicare's finances).

Sorry for my mistake- and thank you Professor Eismeier for catching it now and prompting me to learn so much more about this Medicare trigger provision. A good reminder for me to look before I leap and not just rely on memories of other people's writings for an issue I'm not completely familiar with. Just because Karl Rove is often wrong doesn't mean he's always wrong.

June 10, 2011 at 5:07 PM

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