Paul Ryan makes "Republican" more than a punch line to some derogatory joke:
He does this without, on net, raising taxes. By closing loopholes, he would pay for a cut in the top personal and corporate rates. So how does he shrink the deficit? Through an eye-watering assault on entitlement spending, in particular health care. Mr Obama’s health care reform would be ditched, Medicaid would be converted to block grants, and traditional Medicare would be replaced with vouchers.
If the cost of healthcare simply stays constant (instead of growing as expected), then Ryan's healthcare savings simply shore up the budget by moving the burden of healthcare onto the public.
ReplyDeleteClaiming "savings" is as dishonest as moving a $10 bill from my right pocket to my left pocket and claiming I'm $10 richer. All you've accomplished is change which pocket the money has to come from, not the total amount. The Federal government might pay less, but the individual has to pay more to make up for it. Best case scenario, it's a draw.
But I think it is even worse than that. Government's sheer size gives it far stronger negotiating strength than individuals. I suspect a move to vouchers will increase the growth rate of healthcare costs, not constrain it.
@Mathew:
ReplyDelete"If the cost of healthcare simply stays constant (instead of growing as expected), then Ryan's healthcare savings simply shore up the budget by moving the burden of healthcare onto the public. "
Negotiating power doesn't reduce costs.
remember the story of breast augmentation vs. breast reconstruction, e.g., following cancer. The price inflation of the former is lower than the price of the latter. The difference: you pay for augmentation; insurance pays for reconstruction.
ReplyDeleteRyan's plan doesn't contain healthcare costs, it only contains the part that government has to pay. Compared to a government bureaucracy, individuals have less bargaining power and suffer more from information asymmetry, so my hunch is that the consumer's share of healthcare costs will actually rise faster under this plan than the current plan.
ReplyDeleteThe medical blogs I read complain about scammers, but they're almost always trying to get free iboprofen, pregnancy tests, and taxi rides, which are all relatively cheap. I haven't read about anyone trying to scam a MRI, a heart transplant, chemotherapy, or nursing home care, and that's where the bulk of healthcare costs are. Requiring skin in the game will help the former, but Ryan's plan will negatively impact the latter.
Given that most people die from heart attacks, strokes, cancer, and diabetes, a better plan would involve a Pigou tax on cigarettes, alcohol, and junk food, and using the proceeds to subsidize healthy food and gym memberships. But I just used the "tax" word, and that's Unamerican.
@Mathew:
ReplyDelete1. This hasn't been shown out at all. The areas of health care that individuals usually have to pay for themselves has the lowest growth in price.
2. We already have very high taxes on alcohol and tabacco.
3. "Compared to a government bureaucracy, individuals have less bargaining power and suffer more from information asymmetry"
Government tends to have worse information asymmetry.