THE MEDICARE MESS, PART 4: Barack Obama, 'The Truman Strategy' and the Politics of Health Care in 2012

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Editor's note: This is the fourth of a five part series looking at Medicare by Fox News contributor James P. Pinkerton.

In the previous installments of this series (click here for Part One and here for Part Two and here for Part Three)

By Saturday, April 23, just eight days after House Republicans had voted in favor of Paul Ryan’s “Path to Prosperity” budget, the GOP knew that it had a damage-control challenge on its hands. The headline in The Washington Post that morning read, “Republicans facing tough questions over Medicare overhaul in budget plan”; the story detailed Republican efforts to manage a political squall that could possibly cost the GOP its recently gained control of the House.

Democrats were, indeed, quick to go on the offensive against the Ryan plan. The Democratic Congressional Campaign Committee, the campaign arm of House Democrats, quickly ginned up radio ads against 25 Republican incumbents who voted “aye” on Ryan.

Here’s a sample from Minnesota’s eighth congressional district: “Did you know Congressman Chip Cravaack voted to end Medicare, forcing seniors to pay $12,500 for private health insurance, without guaranteed coverage? Tell Cravaack to keep his hands off our Medicare.”

The truth, of course, is that no Republican voted to “end Medicare.” But this is hardball, and the GOP did, in fact, open up this particular can of Medicare worms.

The Post story highlighted one embattled GOP Congressman, Charles Bass (R-N.H.), recalling his recent experience at town hall meetings: “The first thing” that seniors ask, he told the paper, “is whether or not I’m planning to vote to end Medicare completely.” As a way of soothing senior concerns, Bass has taken to reminding his audiences that there was nothing binding in the Ryan budget.

A few hundred miles to the south, Rep. Patrick Meehan (R-Penn.), is taking a similar tack at his town halls, reminding his suburban Philadelphia constituents that the Ryan plan is only “a sense of what we would like to do, a direction that we’d like to go in.” In other words, the new Republican defense of the Ryan plan is that the vote was only symbolic.

And that’s true--the Ryan plan was ultimately symbolic: The Democrats who control the Senate were never going to go along with it, and President Obama was never going to do anything other than veto it. So that raises the question: Just why, exactly, did Republicans push so hard for Ryan? What was the urgency of voting for huge Medicare cuts over many decades to come, just three months after the GOP took control of Congress?

Perhaps the answer is that Republicans wanted to “send a message” about their fiscal righteousness. Yet if so, they picked a risky way to do it. Polls show enormous opposition to Medicare cuts, from as much as 80 percent of the general public, and even 70 percent of self-described tea partiers.

Of course, it’s a long way between now and election day 2012, and plenty of other issues could overwhelm the Ryan vote. But for the time being, the anti-Ryan backlash suggests that Republicans will have to do some policy rethinking--not just political spinning.

Why? Because the basic reality of the Ryan Plan overwhelms any possible spin: The Ryan plan is a major cut in Medicare. And while the plan is hazy in places--it is, after all, not just a health care plan, but also an overall fiscal and economic plan for the next forty years--it provides enough numbers for critics to pounce on fiercely.

Indeed, for a more rigorous estimate of the Ryan plan’s impact over the long run, we can turn to the Congressional Budget Office--not necessarily a friend of Republicans, to be sure. As CBO puts it, current federal health programs--Medicare, Medicaid, the Children’s Health Insurance Program, and the new subsidies for ObamaCare--account for about five percent of U.S. gross domestic product (GDP).

And according to current projections--absent any Ryan-ish changes--federal health spending would nearly triple, to 14 percent of GDP by 2050. Such a spending surge is obviously not sustainable. Yet under the Ryan plan, federal health spending would not only not increase; it would in fact fall, to around 4.75 percent in 2050. Liberal critics, such as The Washington Post’s Ezra Klein, have responded by taking the CBO calculations and claiming that the Ryan plan would mean a two-thirds cut in per-patient Medicare spending by 2050.  That assessment may or may not be accurate, but one fails to find any refutation to it on the House Budget Committee’s website. 

An observer has to question: Although restraining growth in health spending is desirable, is it really plausible to see federal health spending fall as America ages? Indeed, the percentage of the population over the age of 65, according to the Census Bureau, is projected to increase from 13 percent today to 20 percent in 2050. And whereas the overall population is projected to grow about 40 percent in the next four decades, the number of Americans over the age of 85 will grow more than 500 percent. Inherently, the health care of all those oldsters is going to be expensive.

And how, exactly, will Ryan control Medicare costs? How will his fiscal vision accommodate this “grey wave” of demography and yet still cut health care spending? On these questions, the Ryan plan lacks many specifics, although the document is nonetheless emphatic on one ideological principle--patient choice. “Real reform” for Medicare, Ryan writes, “must eliminate this unsustainable waste and reduce inefficiencies and costs by giving beneficiaries themselves more control over their own health-care benefits and decisions.” In other words, the miracle of the marketplace will control health care spending.

Even more broadly, Ryan asserts that the same market mechanisms that work in other parts of the economy will work just fine for health:

In health care, as in any other economic arrangement, control of money is power. When it comes to controlling health-care costs and saving the nation from bankruptcy, the question is: Who gets the power? One centralized federal government, or 50 million empowered seniors holding providers accountable in a true marketplace? Patient power will always serve the needs of the people far better than bureaucrats.

And so the Ryan plan argues that future Medicare recipients--if the plan were enacted tomorrow, it would kick in for seniors in 2022--should be empowered to choose their own health insurance plan.

Maybe, but maybe not. Anyone who thinks that health care is just like “any other economic arrangement” might wish to read economist Kenneth Arrow’s 1963 essay, “Uncertainty and the Welfare Economics of Medical Care.” In that piece, the Nobel Prize-winner argued that the “asymmetric information” between the doctor and the patient makes bargaining difficult, if not impossible. That is, given the imbalance of information, the patient is in no position to negotiate intelligently with a doctor or other health care provider.

It is true, of course, that some medicines and treatments can be haggled out in the marketplace. As treatments become widely available, or even generic, it’s possible to comparison-shop for the cheapest pill. Indeed, even some once-complicated treatments, such as Lasik, have become inexpensive over time, thanks to fierce competition.

But the Ryan plan would work better for 25-year-olds than 65-year-olds. Older people have more serious problems; it’s hard to dicker in the midst of stroke or cancer. And many old people, of course, are mentally debilitated, even incapacitated, by chronic maladies such as Alzheimer’s Disease (AD).

In fact, not only does the nature of AD undercut one’s ability to shop around, but there’s no real treatment for the disease, other than 24/7 care, once dementia sets in. Today, the average case of AD costs more than $30,000 a year, for a total of $170 billion--the bulk of that cost borne today by Medicare. According to the American Journal of Public Health, the incidence of AD is predicted to triple in the coming half-century,  and it’s difficult to see how the Ryan plan would make AD care cheaper. And so, for a 45-year-old who might have a parent with AD--dealing with care, worrying about his or her own susceptibility to the disease--the Ryan plan could look uncertain, even scary. That, at least, is what the polls show decisively.

So what should Republicans do? Clearly, they need to reassess--and they already are doing so. As Republicans are now saying, the Ryan plan is non-binding, only symbolic, simply “a direction that we’d like to go in.”

Interestingly, in the meantime, the best defense of the Ryan plan has been not a defense at all--but rather a reversal of field, a ferocious counter-attack on the Democrats. In an astute editorial, “The Other Medicare Cutters,” The Wall Street Journal made the point that whatever seniors might think of the Ryan plan, the Democratic plan is worse. After lamenting “liberal distortions” of Ryan, the Journal pivoted and took it to the Democrats, noting that President Obama, too, has a Medicare plan that deserves to be analyzed, criticized--and criticized some more:

Why has there been so little scrutiny of President Obama's new Medicare proposal? Anyone worrying about more individual choice and responsibility in health care might be interested to learn that the alternative is turning every one of these decisions over to a 15-member central committee.

Turning decisions over to a “central committee”? Handing the power of life-and-death to 15 distant bureaucrats? That “central committee” would be the Independent Payment Advisory Board, or IPAB, which was included in the 2010 ObamaCare legislation. The Journal added:

It sounds absurd, but there the President was . . . gravely conceding Mr. Ryan's analysis of Medicare's balance sheet and then claiming that the solution is to give a lot more political power to an unelected board to control health costs. Democrats believe this board will play doctor and actuary and allocate health resources better than markets, so allow us to fill in some of the details of this government-planned future.

A “government-planned future”? What could that mean? It would mean, the Journal declared, that seniors, given over to the tender mercies of the Obama administration, would be getting less care, because IPAB would be “paying less for the services seniors receive, via fiat pricing.” In other words, American seniors would be suffering under British-style restrictions, rationing, and yes, maybe even “death panels.”

As we can see, conservatives are once again firing up the same arguments--“putting a bureaucrat between you and your doctor”--that worked so well for them in 2009-10, when the Democrats were in control of the House and enacting unpopular Obamacare. Indeed, these arguments helped the GOP win the House in November.

Yet having gained that control of the House, Republicans had a chance to put forward a popular Medicare plan--and they failed. Nevertheless, the Democrats might still save them from political defeat, because, as the Journal pointed out, their plan, too, is unpopular with seniors.

So we can note two things: First, both Parties seem to want to cut Medicare, and second, Americans don’t want either party to make those cuts. Both Democrats and Republicans suffer, in other words, when they find themselves in charge and try to implement their respective cost-cutting plans--plans which go against the wishes of the voters.

Meanwhile, in the midst of this dire partisan impasse, the fiscally fatal problem of runaway Medicare spending continues unabated.

So is the situation hopeless? Are we destined to ever-higher health care spending? Or is there a way to deliver better health care--and at a lower cost--through some new approach? We will explore those questions in the final installment.

Read the fifth and final installment, Part 5 in Fox News Opinion on Monday, April 25.

James P. Pinkerton is a writer, Fox News contributor and the editor/founder of SeriousMedicineStrategy.