Monday, April 4, 2011

Republicans Offer Budget Plan

From the WSJ:

Republicans will present this week a 2012 budget proposal that would cut more than $4 trillion from federal spending projected over the next decade and transform the Medicare health program for the elderly, a move that will dramatically reshape the budget debate in Washington.


The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program's soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016.

Mr. Ryan's proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a "premium support" system. Participants from that group would choose from an array of private insurance plans when they reach 65 and become eligible, and the government would pay about the first $15,000 in premiums. Those who are poorer or less healthy would receive bigger payments than others.


The proposal would also convert Medicaid, the health program for the poor, into a series of block grants to give states more flexibility. And it is expected to suggest significant cuts in Social Security, while proposing fewer details on how to achieve them.

The federal government expects to spend about $275 billion in 2011 on Medicaid, the program that provides medical care to the poor and disabled, up from $117.9 billion in 2000. The Congressional Budget Office projects Medicaid spending will roughly double by 2021

This is not an endorsement of Mr. Ryans plan, as it has many problems which I believe are insurmountable -- the least of which is that $15,000 for private insurance for a person or couple aged 65 is not enough by far. I should also add that I fully advocate 100% public health care. The US is one of only three OECD countries that does not have fully funded public health care. At the same time, we pay far more than other countries, yet have a higher infant mortality and lower life expectancy. In short, we are clearly not getting what we are paying for.

However, Mr. Ryan deserves credit for actually dealing with the primary problem -- health care expenditures. While I believe his solution is incorrect, he is attacking the correct problem.