Wednesday, April 06, 2011

And Even More Budget Blather

Jacob Weisberg agrees with David Brooks on the great courage of the Ryan budget proposal. When you read his ode to the proposal ("brave, radical and smart"), keep in mind these simple things:

1. A budget has two sides: revenues and expenditures. It's not smart to focus on just the expenditure side. The Ryan proposal does exactly that.

2. The expenditure side has three large items: Social Security, Medicare and military expenditure. It's not brave to almost completely ignore the military expenditure. The Ryan proposal does exactly that.

3. All government budget proposals have class issues, and so does this one. Look carefully who is asked to share in the sacrifices and who is asked to keep more money. The Ryan proposal doles out candy to the very rich and whips to the rest.

But the proposal is indeed radical. How odd that "radical" is read as positive when it applies to right-wing radicalism of the non-Islamic type. Otherwise it is read as negative.

As Scott Lemieux points out, Weisberg's arguments have other flaws:
First of all, we have the ages-old routine of conflating Medicare and Social Security spending, although one is a major potential problem and one isn’t. (It won’t surprise you, either, to find out that Weisberg seems to like the idea of “gradually raising the retirement age to 70″ — tolerable for well-compensated journalists, not so much for coal miners and people who clean restrooms for a living.) Second, we have the massive upper-class tax cuts of the aughts mysteriously excluded as sources of fiscal crisis. And third, there’s a failure to recognize the possibility that the alleged problems with Medicare and Medicaid might stem from the fact that America’s “free market” health care system covers fewer people at far greater expense with no better results than any other liberal democracy.
Here is where Weisberg reveals flashes of something which might charitably be called ignorance:
Ryan's alternative to Medicare hardly seems as terrible as Paul Krugman makes out. Seniors would enter the health care world the rest of us live in, with co-payments, deductibles and managed care. Eventually, cost control would require some tough decisions about end-of-life care and the rationing of high-tech treatments that have limited efficacy. But starting with a value of $15,000 per year, per senior—the amount government now spends on Medicare—Ryan's vouchers should provide excellent coverage. His change would amount to a minor amendment to the social contract, not a fundamental revision of it.
I have bolded the sentences with which I had the greatest trouble. Note also that the purchasing-power of the voucher would decline fairly rapidly as its value would be tied not to changes in the costs of health care but to the rate at which the Gross Domestic Product grows. Health care costs have risen rapidly in the past and are likely to continue doing so.

How did the seniors get to the wonderland of Medicare without entering the health care world the "rest of us" live in? Does Weisberg think that they have been enjoying Medicare all their lives? Does Weisberg think that he will never grow old himself? It's that feeling I get from reading the text that he views the elderly as a totally separate group of people, living in some sort of a cloud-cuckoo-land. Time for them to fall back into reality!

But of course almost all seniors used to be in the health care world Weisberg wants to return them to. They also paid for the Medicare expenses of previous generations.

Then notice that Weisberg suggests something which is not true: That the situation of the elderly would be just the same as the situation of those who are not yet elderly in terms of health care. But that is simply not true. The elderly are the main consumers of health care for a reason (and that reason has much less to do with the incentive systems of the current Medicare system than with the simple fact that illness tends to happen at the end of one's life span): Their risk of ill health is higher.

Finally, the current Medicare system already has certain deductibles for parts other than hospital care (thanks, Lyle, for reminding me of that in the comments of an earlier post).

It is, however, true that the costs of Medicare are very high and that these costs need to be tackled. How to do that requires a post of its own. But it might be worth thinking about the fact that the conservatives want to ration care by a person's ability to pay for it. They don't call this rationing but rationing it is.