Saturday, February 18, 2012

The War on Wyden

In the current environment, no good faith effort to reach across the aisle to solve a serious problem goes unpunished


Dylan Wulderk said...

I'm no expert on Medicare--although learning as much as I can about that and Social Security are definitely near the top of my to-do list. I don't know what effects the Wyden-Ryan plan would have, but I do have to applaud Mr. Wyden for trying.

He was integral in the PIPA-SOPA battle, and so I spent some time looking up his background, and he's an incredibly interesting guy. He's an environmentalist, progressive on social issues, but has routinely been moderate or even conservative on a host of other issues, and he's had a history of promoting the private sector when it comes to Medicare and wants to get rid of Medicaid, which sounds more like a GOP stance than anything else.

I'm glad he's actually reached out to the Republican Ideas man and put forward a compromise. (Although when you add a moderate and a staunch conservative, I think it's still a conservative compromise.) Ryan's initial plan was incredibly dramatic and this one seems to be more of a moderate-conservative plan. If they can get another Democrat with more a more "lefty" stance on the issue involved, maybe it would have traction.

But of course, Democrats won't want to do anything to it. Medicare is one of the non-starters for the party, which is a shame. They know they're the party of welfare, and they know welfare programs are addicting. Their stance on Medicare is a significant reason for their relevance (considering they're still a party of minorities). Any major change will shake their foundation. Dems won't do anything to hurt that position, and the GOP has to see it as a temporary death knell for their opponents. These positions seem to entrenched to do anything until things get dramatic. It's similar to the energy debate, where the roles are reversed.

Patrick_L said...

I would just point out that this article relies entirely on the gray fallacy and provides no reasons for why, or why not, the Ryan-Wyden approach is a good idea. I can provide theoretical arguments and empirical research for either supporting or critiquing the Ryan-Wyden premium support proposal, but the fact that two people who often disagree actually agree on an issue is not one of them.

Patrick_L said...

My first message is so short (and probably curt-sounding) because I think responding to this question in sufficient detail would take many hours, which I no longer get credit for (too bad Professor Eismeier) and so this must conflict with other responsibilities I have.

But I think maybe I can get a sufficient response out relatively quickly. Essentially, the idea of premium support relies on the argument the increasing competition as the plan's sponsors define it will inevitably improve the system, relying on the general consensus most people agree with that in most cases free markets are the optimum system relative to things like government control. Unfortunately, the theoretical and empirical success of markets relies on a number assumptions that we know don't hold true in health care. The field is riddled with market failures that can lead to markets generating sub-optimal outcomes. Essentially, the successful track record of free markets in most cases does not necessarily apply to health care. This has been known for decades- Kenneth Arrow famously did pioneering research on this issue.

In addition, we can look at the comparative data between Medicare and comparable private insurance and see that neither has been effective at cost-control and they both have pretty similar (and thus very poor) records on health-care cost control (the costs from a federal budgetary perspective being the major issue the premium support model seeks to address). Depending on the time period and how you define the comparison- you can get very modest (on the grand scheme of things) advantages one way or another- but in general it's pretty clear that so far in the U.S. neither approach- more private vs. less private- has performed better than the other. In addition, some of the models premium support advocates often cite like Medicare Part D or the Federal Employees Health Benefit program have likewise performed poorly on cost-control. Essentially, this is no clear theoretical argument or empirical evidence showing that premium support would perform better than the current system. (Of course, this is no clear evidence showing it would do worse. Also, everyone agrees the current system is unsustainable and needs reform- but since there's no evidence showing premium support would do better...)

There is one interesting piece of comparative evidence- other Western, developed nation systems do much better on cost-control (measures as costs-per-capita, we can discuss growth in costs if you want) while achieving comparable outcomes, and do so using a variety of systems, all of which involve a greater scope for government than we currently have in the U.S.- whether through regulation of private actors (insurers, providers), single-payer government-run systems, or like the U.K. model where the government runs almost everything. They do all this while achieving greater insurance coverage of their entire population. (Of course, this argument does not prove that it is because of this greater government scope that these other nations do better. There is no private market counterfactual comparable to the conservative ideal out there, though this doesn’t necessarily mean that such a model might, if implemented, prove to better than anything currently in existence).

Patrick_L said...

I’d conclude from the theoretical, U.S. historical, and international record that it’s impossible for anyone to say with certainty that a premium support reform model would likely make the system better or worse off. In my mind, it’s a little bit like a shot in the dark. Everyone agrees the current situation is untenable. We need reform. Premium support is a reform that might make things better or worse- no one knows and there is evidence and arguments for either belief.

However, there are many other sensible reform models out there, and the premium support proposal has a number of practical defects (weakening the future ability of policymakers to use Medicare to improve the system through its demand-side power), theoretical concerns (incentivizing insurers to generate profits by cherry-picking elderly customers), implementation concerns (it would require an enormous regulatory structure to prevent insurance market failures, a structure Ryan has never in the mildest terms indicated he would support and one that even technocratic supporters like Alice Rivlin have done on the mildest work on addressing), and many other concerns I haven’t mentioned here and won’t (for now) due to time constraints.

Basically, the case for (or against) the premium support model for Medicare is not so cut and dry as Strassel would have the reader believe as she waives around the fact that both a Democrat and a Republican have come out in support of it. Do you know how many really bad ideas are out there that members of both parties like? When evaluating important policy issues like Medicare reform, we can and should do better than relying on Strassel’s childish-level of argumentation.