Ethics & Public Policy Center

Medicare Jujitsu

Published in The Weekly Standard on August 27, 2012



In the wake of Mitt Romney’s selection of Paul Ryan as his running mate, conservatives and liberals seemed almost equally happy. To the right, the pick represented a bold decision to make a forthright case against President Obama’s vision for the country and to champion solutions to the problems that the president has only made worse. Romney had put his party’s best policy thinker and one of its best communicators on his ticket and was raring to make his case to voters. To the left, it seemed like a sop to conservatives that would force Romney to defend a policy vision the public would not buy. Romney had put his party’s most controversial budget cutter on his ticket and ran the risk of being tagged with Ryan’s parsimony.

They cannot both be right. But they do both think they are right, and look likely to act on that conviction. That very fact will tend to counteract the chief weakness of the Romney campaign thus far and to reinforce the chief weakness of the Obama campaign.

Romney now looks set to run a campaign built around a stark and specific critique of Obama’s economic failures hitched to a relatively vague but distinctly conservative alternative vision focused on enabling growth in the near term and reforming entitlements in the long term. Obama looks set to run a campaign built around a highly detailed critique of a few conservative ideas (not all of which his opponent has actually championed) and a slash-and-burn offensive against Romney and Ryan as individuals.

If the first week of the Romney-Ryan ticket was any indication, this is not going to work very well for the Democrats. The Ryan pick, and the ensuing liberal glee, almost immediately set off a debate about Medicare for which it soon became apparent that the Democrats were woefully unprepared.

Medicare has been a favorite issue of the left for decades. As the program’s spending has ballooned out of control, Democrats have used every Republican attempt to rein it in as an opportunity to paint the GOP as the enemy of the elderly​—​telling seniors that their benefits were threatened, and scaring Republicans away from reforms. But Democrats have grown so comfortable with Medicare demagoguery that they have neglected to actually keep themselves on the safe side of the issue. And in their desperate effort to mask the immense cost of Obamacare in 2010, they took more than half a trillion dollars out of Medicare over the coming decade to pay for their new health entitlement for younger Americans.

Republicans, with Ryan first among them, saw in this an opportunity to transform the Medicare debate, and starting with the FY 2012 House budget proposal in the spring of 2011, they have pursued a course that would leave all current seniors and near-retirees untouched while transforming Medicare for younger Americans into a premium-support system that would reduce costs through intense competition among insurers.

The reactions to Ryan’s first Medicare proposal, and the course of a few subsequent special elections for House seats, gave Republicans an opportunity to hone their idea and their case for it in ways that mostly went unnoticed by the Democrats.

The only liberal charge against the plan that seemed to stick was that the premium-support benefit might not grow quickly enough to keep up with premium costs, potentially shifting costs to seniors. So proponents of premium support tweaked the idea to enable the benefit to be determined through an annual competitive bidding process among insurers, so that it would automatically keep up with premium costs. If competition succeeded in lowering costs, the government’s budget outlook would improve, if not then it would not, but either way future seniors would be guaranteed a comprehensive benefit at no greater out-of-pocket costs than those incurred today.

Mitt Romney was actually the first to propose a version of this reform, in the course of the primary campaign, and a few weeks later Paul Ryan offered an essentially identical proposal together with Democratic senator Ron Wyden of Oregon​—​a liberal who has always been open to pro-market health reforms. That Ryan-Wyden proposal, slightly tweaked, was also in the FY 2013 Republican budget passed this spring by the House.

Meanwhile, in the race to fill an open seat in Nevada’s second congressional district in September 2011, Republicans had a perfect test case for their Medicare argument. Democrat Kate Marshall attacked Republican Mark Amodei for his support of the Ryan reforms, and Amodei answered with a series of ads pressing home two points that Republican polling had discovered to be powerfully effective: The Republican proposal would never affect any current seniors, and the Democrats had actually cut half a trillion dollars from Medicare. Amodei not only won the election, he won the senior vote comfortably and was deemed a more reliable protector of Medicare than Marshall in the final pre-election polls. His standing on Medicare was better after the campaign than it had been before his opponent ever told voters about the Ryan plan in the first place.

Obamacare on the one hand and the Romney/Ryan-Wyden proposal on the other stood to dramatically alter the political terrain of the Medicare debate. It is the Democrats who now propose to cut current seniors’ benefits and access to care while still failing to avert the program’s (and the nation’s) fiscal collapse, and it is the Republicans who would protect current seniors’ benefits and make them available to future seniors while saving the program from collapse through market reforms.

Most Democrats missed all of this and assumed that their old bag of tricks would make for a powerful attack against Romney on the issue in the fall. And when Romney chose Ryan​—a leading voice for Medicare reform​—​they thought they saw their chance to strike an early blow. They unleashed the usual nonsense: Romney-Ryan would end Medicare and increase seniors’ costs. But they soon found themselves forcefully criticized in response. The Romney campaign unleashed a series of attacks, including a widely aired television ad, pointing out that Obama had cut Medicare to pay for his unpopular health reform, and that the Romney-Ryan approach would not only leave today’s seniors alone, it would save the program for future retirees.

Soon, the two sides were engaged in a debate regarding the minutiae of Obamacare’s raid on Medicare. Having just called Paul Ryan the enemy of seniors, Democrats defended their cuts by saying Ryan had retained them in his budget (he didn’t—he put the money toward the Medicare trust fund, while Romney would put it back into Medicare’s operating budget; both would undo Obamacare’s raid of Medicare). And once forced to acknowledge the cuts, they insisted that they were only cuts in fees to health care providers, not in benefits to seniors​—​though of course in a fee-for-service system, cuts to fees are cuts to services, which is the point of Romney and Ryan’s larger reform away from fee-for-service insurance. By week’s end, Democrats were struggling to demonstrate that they were no worse than Republicans when it came to protecting Medicare​—​hardly where they imagined their attacks on Ryan would take them.

They were unprepared in part because many on the left almost certainly didn’t realize until last week that Obamacare depended on such large Medicare cuts, and in part because they assumed they could get away with it since voters simply associated them with the popular program. Asked by George Stephanopoulos on August 12 whether the Obamacare cuts would harm Democrats’ standing with seniors, former Democratic National Committee chairman Howard Dean said the cuts were real, but Romney couldn’t make an issue of them because “nobody believes it. You can’t convince people that a Democrat’s going to cut Medicare. They don’t
believe that.”

We shall see. But a fight over whether they would cut seniors’ benefits is not the fight Democrats hoped for, and they now look likely to be denied what they imagined would be their most powerful issue of the election. Earlier this year, when she was asked what the Democrats’ top three issues would be in the coming campaign year, Nancy Pelosi responded: “Medicare, Medicare, Medicare.” So what’s left?

Not much, it seems, because the other specific proposals on which the left imagines Romney will be vulnerable because of Ryan probably do not offer them friendlier terrain. On Social Security, Romney again follows the clever new Republican entitlement-reform recipe: Leave current seniors and those now over 55 entirely untouched and save the program for future retirees. In the case of Social Security, the retirement age would be gradually increased and cost-of-living increases for the wealthiest seniors slowed. Those two modest steps would be enough to save the program’s finances, and no current seniors would have any reason to object since they’re exempt.

On Medicaid, Romney would block-grant the federal portion of the program to the states and allow them far greater flexibility to alter the program’s design. Ryan proposed a similar approach in his budget, with a particular spending trajectory that would grow with inflation and the population. He has also backed a higher growth rate in a separate proposal offered jointly with Democratic budget guru Alice Rivlin. Romney does not specify how the level or rate of the block grant would be set, but the key for both is the flexibility and efficiency made possible by block granting​—​a point easily made by analogy to the successful welfare reform of the ’90s.

Beyond these, the Democrats will surely try to argue that Romney’s and Ryan’s general tax outlines (to broaden the base and lower rates) would benefit the rich, though Romney has plainly said he would not reduce the share of the tax burden borne by the rich. And they will surely try to argue that the long-term spending trajectory of the Ryan budget​—​with its fairly steep decline in domestic discretionary spending as a share of the economy—is implausible, generally making the point with their own quite implausible assumption that cuts would be evenly distributed across all programs. But Romney has not offered long-range spending proposals of that sort, and he is after all President Obama’s opponent in this race. Does Obama expect to win reelection by debating whether House Republicans would spend too little on the National Weather Service in 2034?

It is not easy to see how any of this offers much fruitful ground for Democratic attacks. In each case, an attack would require a great deal of conjecture and assorted unflattering assumptions, yet would invite a fairly specific and obvious question in response: Compared to what?

Their peculiar decision to focus on the minutiae of Republican policy proposals for addressing the country’s economic and fiscal problems puts the Democrats in the position of highlighting the astonishing irresponsibility of their own plans for the future. President Obama has not only presided over the weakest economic recovery in decades, he is also willing to abide unprecedented deficits going forward, Medicare’s rush toward insolvency and collapse, and an explosion of debt unlike anything America has ever seen, all of which threaten the fiscal future of the government and the economic future of the nation. He offers to do essentially nothing to address any of this, focusing instead on increases in the top two income-tax rates that would barely make a dent in the debt. He has ignored the recommendations of his own fiscal commission, refused to consider any structural reforms of entitlements, and pushed through the creation of yet another health entitlement that looks to be as unsustainable as those we have already.

In essence, Barack Obama is saying to Mitt Romney what Treasury Secretary Tim Geithner said to Paul Ryan in a budget committee hearing last winter: “We’re not coming before you today to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.” Geithner’s declaration of delinquency and failure was not well received, and it is hard to imagine that Obama’s will fare much better.

By choosing Paul Ryan for his running mate, Mitt Romney has moved to sharpen this point for the public: The president has failed and has no plan for doing better. This election will not be a referendum on Paul Ryan or Mitt Romney, despite the Democrats’ best efforts. It will be a referendum on a failed incumbent president. And Romney’s choice of Ryan increasingly seems likely to lull the president into a misguided campaign of flailing counterpunches. Obama now seems set to spend the next three months merely telling voters what he is not. But they know what he is not. He is not serious.

Yuval Levin is a contributing editor to The Weekly Standard, Hertog fellow at the Ethics and Public Policy Center, and editor of National Affairs.

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