Health

GOP Super Committee Co-Chair: Lawmakers Failed Because Democrats Refused To Privatize Medicare

Rep. Jeb Hensarling (R-TX) faults the Democrats’ refusal to accept partial Medicare privatization for the super committee’s inability to come up with a bipartisan plan to lower spending in today’s Wall Street Journal. He writes, “Democrats on the committee made it clear that the new spending called for in the president’s health law was off the table” and pretends that the spending in the Affordable Care Act added to the deficit (it actually reduces it). “Republicans offered to negotiate a plan on the other two health-care entitlements—Medicare and Medicaid—based upon the reforms included in the budget the House passed earlier this year,” he continues and lays out the premium support proposal offered by Alice Rivlin and Pete Domenici:

The Medicare reforms would make no changes for those in or near retirement. Beginning in 2022, beneficiaries would be guaranteed a choice of Medicare-approved private health coverage options and guaranteed a premium-support payment to help pay for the plan they choose….These seniors would be able to choose from a list of Medicare-guaranteed coverage options, similar to the House budget’s approach—except that Rivlin-Domenici would continue to include a traditional Medicare fee-for-service plan among the options.

This approach was also rejected by committee Democrats.

The Congressional Budget Office, the Medicare trustees, and the Government Accountability Office have each repeatedly said that our health-care entitlements are unsustainable. Committee Democrats offered modest adjustments to these programs, but they were far from sufficient to meet the challenge. And even their modest changes were made contingent upon a minimum of $1 trillion in higher taxes—a move sure to stifle job creation during the worst economy in recent memory.

Hensarling doesn’t mention that the Rivlin-Domenici premium-support proposal doesn’t so much lower national health care spending as it shifts it to the beneficiary. The plan reduces the federal contribution to Medicare by capping costs for each beneficiary and offering premium support credits that won’t keep up with actual health care spending. The federal government spends less, but seniors will pay more out of pocket for health care benefits every year. The proposal also breaks up the market clout of traditional Medicare and rather than ratcheting up some of efficiencies and payment reforms in the Affordable Care Act, it sets the nation on an untested path of private competition — leaving seniors vulnerable to the manipulations of for-profit health insurers.

Democrats, for their part, offered rather substantial concessions on Medicare spending. As the Center on Budget and Policy Priorities argued, the Democrats’ $3 trillion deficit proposal to the super committee “stands well to the right of plans by the co-chairs of the bipartisan Bowles-Simpson commission and the Senate’s ‘Gang of Six,’ and even further to the right of the plan by the bipartisan Rivlin-Domenici commission.” The plan contained “substantially smaller revenue increases than those bipartisan proposals while, for example, containing significantly deeper cuts in Medicare and Medicaid than the Bowles-Simpson plan.” For instance, Bowles-Simpson offered $383 billion in Medicare and Medicaid, while Democrats put $475 billion on the table.

President Obama introduced $320 billion in health care savings, mostly from the pharmaceutical industry and other providers, including rural hospitals, teaching hospitals, and biotechnology firms. But the plan even incorporated the GOP’s push for greater means testing in Medicare, asking some wealthier beneficiaries to pay more for coverage and sought to give beneficiaries “skin in the game” — as the GOP puts it — to discourage over treatment.

All of these are significant concessions — as are the health cuts included in the trigger mechanism — but Hensarling and Republicans aren’t interested in bipartisan agreement. They’re not accepting anything short of Medicare privatization.