Friday, April 8, 2011

Ryan's "Path to 'Corporate' Prosperity" doesn't make sense. How simple is that?

The CBO didn't break down the Paul Ryan plan by the numbers, but conceptually, it found the plan saves money. But reality has some tough love waiting in the wings, and the numbers will make a huge difference.

I thought this analysis of Rep. Paul Ryan’s “Path to ‘Corporate’ Prosperity” hit a few easy to understand points that many conservatives should consider:
CNN: U.S. Rep. Paul Ryan unveiled his "Path to Prosperity" budget proposal and made some bold claims about what it would do. 
1. Since there are at least 150 million people in the potential U.S. work force, reducing unemployment in the next year by more than 2% would mean adding more than 3 million new jobs. I've not seen any other economist who claims this is possible, let alone sustainable. 
2. Paul Ryan: the Dr. Kevorkian of Medicare? Medicare today is essentially a defined-benefit program, meaning that everyone using it knows exactly what benefits they are going to get … Ryan is proposing a defined contribution plan. Everyone would get vouchers to buy private insurance. Voucher amounts would be set to rise at a rate far below the historical rate of increase in health care costs, meaning that more of the cost will fall on the shoulders of senior citizens each year. His hope is that this will force costs down. The more likely effect is that more and more senior citizens will find adequate insurance unaffordable. 
3. Ryan's changes affect only those who are now 55 or younger. Everyone else still gets traditional Medicare. This means that younger Americans will have to pay for their elders' potentially better and cheaper insurance but will not get it themselves. 
4. Ryan has recommended that Medicaid be first converted into a block grant program and then reduced … states … might cut the benefits or reduce Medicaid in other ways. But with reduced funding … benefits … will have to go down, or physician reimbursement will. Medicaid is already underfunded. 
5. Ryan describes Medicaid as "welfare," but it's not close … More than half of Medicaid spending goes to the disabled or to senior citizens who are so poor they qualify for both Medicare and Medicaid. These people are not "out of work." Many are very sick or institutionalized. Most of the rest are children or pregnant women. Cutting their benefits won't make them more productive. 
6. And as some complain about how many physicians are refusing to accept Medicaid now, is there anyone who thinks that more of them will do so once funding is reduced and reimbursement goes down? This isn't a fix.
Dr. Aaron E. Carroll is an associate professor of pediatrics at the Indiana University School of Medicine and the director of the university's Center for Health Policy and Professionalism Research. He blogs about health policy at The Incidental Economist.

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