Dean Baker is co-director of the Center for Economic and Policy Research
House Budget Committee Chairman Paul Ryan put out a budget proposal last week that will leave the vast majority of future retirees without decent health care by ending Medicare as we know it. According to the Congressional Budget Office (CBO) analysis, most middle-income retirees would have to pay almost half of their income to purchase a Medicare equivalent insurance package by 2030. They would be paying much more than half of their income in later years.
This sort of broadside against the living standards of the middle class might have been expected to draw an outraged response in a nation that exalts the lifestyle and values of the middle class. Instead the punditry rallied around Mr. Ryan’s plan to deal with the problem of run-away entitlement spending, crediting it for being “serious” even if they did not embrace all the details.
If there is any doubt that our political system is controlled by an elite who is completely removed from the bulk of the population, this response to the Ryan plan ended it. There is nothing at all serious about the Ryan plan. It is naked attempt to redistribute yet more money to the country’s rich at the expense of everyone else.
The proposal to end Medicare relies on market efficiencies to get health care costs under control, as though we had not tried this before. Has Representative Ryan never heard of Medicare Advantage or Medicare Plus Choice? Doesn’t he know that we already have the opportunity to see the effectiveness of private insurers in containing health care costs in the vast non-Medicare insurance market?
Based on this extensive experience, we know that the private insurance market does not control costs. This is why CBO calculated that Ryan’s plan would hugely raise the cost of health care for seniors. If every senior got a Medicare equivalent policy under Representative Ryan’s plan (which most will not be able to afford), the added cost of his system would be more than $20 trillion over the next 75 years.
This comes to more than $60,000 for every man, woman and child in the country. That would be money out of the pocket of ordinary workers and retirees that will go to the insurance and pharmaceutical industries, highly paid medical specialists and other health care providers.
When it comes to redistributing money upward, the bar for intellectual coherence is set very low. Pundits from across the political spectrum had a hard time containing their enthusiasm for Ryan’s plan even if few were willing to embrace it in its entirety. And, if there was not enough substance over which to get excited, then there were always the 37 footnotes which Washington Post columnist Charles Krauthammer trumpeted last week.
In principle the country’s elite should be laying low right now. After all, their greed and ineptitude has given us the worst economic collapse since the Great Depression. But after getting the Wall Street banks back on their feet with trillions of dollars of government subsidized loans, the elite are once again making a full-frontal assault on the living standards of the middle-class. Last week it was Medicare, but they promise to be back to attack Social Security in the not-too distant future.
The ostensible rationale for this attack is the country’s huge budget deficit. This is garbage. As all the pundits know, the country has a huge deficit today because the Wall Street boys drove the economy off a cliff. If the government deficit was not propping up the economy we would be looking at 11 or 12 percent unemployment, rather than 8.9 percent. Spending creates jobs and at this point it is not coming from private sector, so the government must fill the hole.
Over the longer term the projections of huge deficits are driven by the projected explosion in health care costs. President Obama’s health care reform took steps toward constraining these costs, although probably not enough. Remarkably, Ryan’s plan abandons these cost-control measures, virtually guaranteeing that quality health care becomes unaffordable for all but a small elite.
And the pundits call Ryan’s plan “serious.” Yes, it is very serious. It is a serious plan for taking tens of trillions of dollars from low-income and middle-income people and giving them away as tax breaks to the rich and to the health care industry. It is about as serious as a robber with a gun pointed at your head.
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