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Eat-Your-Spinach Budget Reforms

Democrats seem to have more “street smarts” than Republicans when it comes to grass roots politics. 

In 1983, both parties agreed to cut Social Security benefits by raising the retirement age and adopting other reforms. How did they explain that change to voters in the next election? Republicans typically told voters they had to “pare back the program to something we could afford.” Democrats typically said they had “saved Social Security.”

We are seeing a repeat of that exercise, now that both parties agree that entitlement spending (Social Security, Medicare, Medicaid, etc.) is completely out of hand. The Republican message to voters is: we have to suck it in, tighten our belt, make do with less. I’ll bet that most Democrats will find a way to argue that they’re doing the beneficiaries a favor, no matter what spending cuts they agree to.

Basically, the Republican message tends to be: eat your spinach. The Democratic message tends to be: we may serve you spinach, but we’ll tell you it’s cherry pie.

Why is it important to know these things? Because we absolutely have to do something about entitlement spending — especially health care spending. And for that to work, I believe we need the natural skills of both political parties. From Republicans, we need the reform ideas. From Democrats we need to be able to shape the reforms and sell then in a way that makes them palatable.

I have a lot of respect for anybody in public life who takes on the thankless task of proposing ways to control Medicare spending. First there was Alan Simpson and Erskine Bowles, co-chairs of the president’s National Commission on Fiscal Responsibility and Reform. Then there was Paul Ryan and Alice Rivlin, the House Republican and the Democrat who once directed the Congressional Budget Office. Then, there was the Ryan House Republican budget proposal. Sen. Joe Lieberman (D-CN) and Sen. Tom Coburn (R-OK) have a proposal. And word has it that there are many other look-alike proposals being conjured up by members of Congress in both parties.

All these proposals have one thing in common: they try to slow the rate of growth of Medicare by shifting costs to the beneficiaries. If government spends less on the health care of current retirees, the retirees will have to make up the difference out of their own pockets. If the government spends less on the next generation of retirees, young people will have to prepare to spend more of their own money during their retirement years. For example, the Lieberman/Coburn proposal would:

  • Increase the age of eligibility for Medicare from 65 to 67, phased in over a period of years;
  • Increase out-of-pocket deductibles (although increasing protection against catastrophic expenses).
  • Increase means testing, so that wealthier retirees would pay for more of the cost of their coverage.

Although each of the proposals is “bipartisan,” the left regards them as essentially Republican ideas. In a sense they are right. These are basically eat-you-spinach reforms. They are all pain no gain. They shift costs to people without giving them any new tools to be able to bear the increased burden they will be asked to carry.

Here is a better (and more palatable) idea: combine the spending cuts with a set of new tools that makes it easier for the beneficiaries to bear the burdens. I believe seniors would accept higher deductibles and co-payments under Medicare, provided that we do other things to help them make health care more affordable.

Former Medicare Trustee Thomas Saving and I recently proposed nine ways to empower seniors in the medical marketplace. They include allowing Medicare beneficiaries to use the services of walk-in clinics, urgent care centers, surgi-centers and doc-in-the-box outlets. Each of these services costs less than traditional care. That’s why they exist. They are mainly catering to patients who are buying care with their own money. Most do not accept Medicare patients because Medicare’s fees are too low.

Saving and I proposed to let Medicare pay whatever fee other patients are paying. Barring that, let the senior top up Medicare’s fee to pay the market price. Since the fees charged by a walk-in clinic are less than the fees charged by a primary care physician’s office or a hospital emergency room, this proposal would make medical care more affordable. And since walk-in clinics are usually easy to get to and involve very little waiting, this proposal would make care more accessible.

For young people a similar principle applies. In return for reducing future spending under Medicare, young workers need to be able to save in a tax free account to be able to pay for more of their own care once they reach retirement.

In general, people will accept less from government, provided they are given new freedoms to provide for themselves.

John_GoodmanJohn C. Goodman is president and founder of the National Center for Policy Analysis, a free-market think tank located in Dallas, Texas.  The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.” Dr. Goodman’s health policy blog is the premier right-of-center health care blog on the Internet.  It is the only place where pro-free enterprise, private sector solutions to health care problems are routinely examined and debated by top health policy experts across the ideological spectrum.

Source: John Goodman's Blog

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