Thursday, December 22, 2011

A Litmus Test for Elected Officials

by Brian Klepper and David C. Kibbe

Six months ago, who could have imagined that a large percentage of rank-and-file Americans would support the Occupy Wall Street (OWS) against special interests’ rigging of the American dream? So why not go to the next step? Why not pointedly ask political candidates, “Will you take money from lobbyists?” and “If elected, what will you do to stop special interest influence?”

Most Americans are deeply disturbed by this issue. In a recent Time Magazine poll of people familiar with the OWS protests, 86 percent thought that “Wall Street and its lobbyists have too much influence in Washington.” Gallup found that 68 percent of Americans think corporations should have less political influence.

These trends didn’t just happen. They resulted from special interests’ vigilant attention to legislative possibility, lubricated by the exchange of money for votes. Influence peddling is now so accepted in American politics that the Center for Responsive Politics (CRP) has established a lobbying data base, Open Secrets. But making lobbying contributions transparent hasn’t slowed the torrent of money that re-shapes law and wealth distribution.
Since 1952, the percentage of gross domestic product (GDP) represented by corporate taxes has plummeted from 6.1 to 1.0 percent, while the percentage represented by employment taxes has skyrocketed from 1.8 to 6.3 percent. Meanwhile, a just released Congressional Budget Office study confirmed that the top 1 percent of earners more than doubled their share of the nation’s after tax income over the last 30 years.

CRP’s numbers show that 13,000 lobbyists contributed $3.5 billion in Congress in 2010. Considering that Congress influences the flow and distribution of a $15 trillion national economy, these investments promote unfair advantages extremely cost-effectively. Politicians from both parties fund their campaigns with the money, shrug off the system’s financial conflicts, and apparently avoid thinking too hard about the consequences.

The intensifying ability of the powerful to buy America’s lawmakers’ votes is the greatest threat to the America that most of us grew up believing in. It is why the rich have gotten much richer, why large, profitable corporations pay no taxes, why health care costs have continued to explode, and why Americans’ social mobility is at an historic low. America has many difficult problems, but lobbying and the way we finance elections are among the deepest, facilitating many others.

Voters can facilitate rapid change by holding their representatives accountable. Asking our political candidates who they think they’re working for would be a simple but powerful way to bring America back into balance.

Brian Klepper, PhD is a health care analyst and the Chief Development Officer for WeCare TLC Onsite Clinic. David C. Kibbe, MD, MBA is Senior Advisor to the American Academy of Family Physicians and an industry advisor on health information technologies.

Wednesday, December 14, 2011

Paul Ryan and Ron Wyden Blow the Medicare Reform Debate Wide Open!

House Budget Chair Paul Ryan (R-WI) and Senator Ron Wyden (D-OR) have embraced a Medicare reform plan that in concept borrows heavily from one championed by former New Mexico Senator Pete Domenici and former Clinton budget chief Alice Rivlin.

Specifically, Wyden and Ryan are proposing to alter the earlier Ryan Medicare plan by:
  1. Continuing to offer the traditional Medicare plan—Ryan would have eliminated it—in addition to a range of private Medicare plans offered by health insurers.
  2. Tying federal Medicare premium support to an amount equal to the second lowest cost Medicare plan—public or private—available to seniors in each market. Ryan would have set a flat premium support amount in year-one and increased that only at the rate of inflation.
  3. Instituting a series of consumer protections and medical underwriting rules designed to protect seniors.
  4. Instituting an annual cap on what the federal government could pay for Medicare at an amount equal to the increase in the nation’s GDP + 1%—Ryan would have capped annual increases in the federal premium support amount at the increase in the consumer price index.
On this blog I have been arguing that the risk for health care costs rising too quickly should not be borne entirely by seniors--that the stakeholders who really run the system should be most accountable. And, that is what the Wyden-Ryan plan would do: "Any increase over that cap will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums,” their plan states.

The Wyden-Ryan plan would begin in 2022.

Under Wyden-Ryan, if Medicare costs increased at a rate greater than the cap, the Congress would have to determine where to make reductions in spending—they could not directly cut senior benefits. Just what would force them to do that is unclear.

The new Wyden-Ryan Medicare policy proposals accomplish an elegant combination of key progressive and conservative health care reform principles. Their proposal also produces an enormous political bombshell on the eve of the 2012 elections.

Wyden and Ryan also propose to improve the under-age-65 employer health insurance market by allowing businesses with fewer than 100 workers to move to a defined-contribution model without tax penalties—something that is very similar to the earlier Wyden-Bennett health reform plan.

An Elegant Policy Compromise
Republicans have supported a defined contribution approach to Medicare reform. Already, House Republicans have voted in favor of the first Ryan proposal. That proposal would eliminate the traditional Medicare plan and replace it with a premium support system, or voucher, with which to buy from a range of private Medicare offerings. Any annual increase in the value of the premium support under the first Ryan plan would be capped at the rate of annual inflation as defined by the consumer price index—health care costs have consistently risen at much faster levels.

On this blog, I have been very critical of that proposal because it would shift all of the risk for the adequacy of any future federal premium support entirely onto the shoulders of seniors.

Democrats generally believe in the current Medicare plan, that seniors should be guaranteed a defined Medicare benefit and that the government pay a fixed portion of all Medicare costs as it does now—a defined benefit plan.

The problem is that the defined benefit Medicare plan we now have, and the government’s guarantee to pay most of its costs, is literally bankrupting the country.

So, something has to give.

What is elegant about the Wyden-Ryan compromise is that they have proposed a hybrid plan—it contains significant elements of both a Republican defined contribution and a Democratic defined benefit approach.

Republicans get an affordable cap on what the federal government would spend on Medicare—that growth would be no more than GDP+1%—and they would get a program built on a free market platform where consumers would have the incentive to maximize their premium support by shopping for the plan that best met their needs.

Democrats would get a plan that still contained the traditional government-run Medicare plan as one of the options and they would have a plan where all seniors were guaranteed a federal premium support level good enough to buy at least the two lowest cost Medicare plans available in their community—albeit maybe not the traditional Medicare option.

If there was ever a place for Republicans and Democrats to compromise on Medicare reform this is it. It is an elegant compromise—a hybrid—of both defined benefit and defined contribution principles.

The Political Bombshell
Frankly, the way Washington normally works, I would have expected this kind of compromise a year from now—after the 2012 elections.

But if an idea like this is ever going to make it into law, the right thing to do is to get it out there now so that the coming election debate over Medicare has all of the good ideas on the table.

Maybe a good sign is that both sides are claiming victory. Ezra Klein at the Washington Post says, "But the secret of these types of premium-support platforms is that they are, in essence, a vindication of the Affordable Care Act." The Wall Street Journal is out with an editorial on Thursday claiming the Wyden/Ryan proposal is a Republican victory “because it shows that the serious entitlement debate is taking place within the camp of choice and incentives, not the Obama status quo.” Nice try guys.

But politically, it is unavoidable to conclude that Ryan has given all of those Republicans in the House, who have already voted for his first Medicare plan, a severe case of heartburn—not to mention all of those Republican presidential candidates who have made the first Ryan Medicare plan a virtual litmus test for who really is a conservative Republican.

To say Ryan’s first Medicare plan was controversial and a huge political risk is a pretty big understatement. And, many Republicans, particularly in the House, unconditionally embraced it.

But, here is what Ryan said in Politico on Wednesday:
“If you wait and allow the political paralysis to stop us from fixing and saving this program then you’re not going to be able to grandfather people. Then you’re not going to have severe disruptions in seniors lives that would just be, I think, morally wrong because we see this problem coming. What Ron and I are trying to do is to prepare the ground for a consensus to be accomplished as soon as the politics allow it to happen.”
Can’t disagree with that logic—that bipartisan logic, in fact.

But what does that do for all of the House Republicans who stepped out on that risky Medicare limb for Ryan and now have to defend their vote on the eve of an election? A vote that would have “killed Medicare as we know it?” Or, those Republican presidential candidates who couldn’t wait to out do the other candidates with their zealous support of it?

Gingrich and Romney embraced the Ryan Medicare plan—albeit with the key modification that the Ryan plan should keep Medicare as one of the options. Smart on their part. But Ryan goes a lot further than that in his bipartisan proposal with Democrat Wyden by, among other things, increasing the rate at which premium supports—and therefore the federal entitlement—would increase and by creating a defined benefit Medicare floor in the new proposal as well as conceding consumer protections to Wyden (make that more regulation than most Republicans would like to see).

Democrats may now be mourning the loss of the first Ryan plan they thought was a big fat political target going into 2012. But, by coming on board with Wyden, Ryan has all but conceded his first proposal wasn’t politically acceptable. Democrats who said they would never alter the Medicare entitlement, an unrealistic promise in the face of the debt crisis, can't be happy a leading progressive has found a way to do it.

Democrats jumped all over Gingrich’s original rejection of the Ryan plan, when he called it “right wing social engineering.”

You have to believe they are now going to have a better time jumping on all those Republicans who voted for, or have unconditionally supported, that first Ryan plan now that that key parts of that idea have been abandoned by its author.

But that analysis focuses on the partisan politics that are sure to follow in this town.

I will suggest that this proposal represents something above all of that.

Who is the winner here?

Bipartisanship. This compromise carefully recognizes and balances important principles from both sides toward a solution to a major problem and I hope people who really want to fix things will appreciate that.

This is a good day for the country—and we haven’t had one in a while.


Avoid having to check back. Subscribe to Health Care Policy and Marketplace Review and receive an email each time we post.

Blog Archive