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Economy

Privatization Fan Paul Ryan Pushes False Argument That Payroll Tax Holiday Will Undermine Social Security

Last year, when Democrats and Republicans were negotiating a short-term extension of the payroll tax holiday, multiple Republicans pushed the false idea that extending the payroll tax cut would undermine Social Security by robbing its trust fund of vital revenue. Those claims were repeatedly debunked by media outlets, members of Congress, and even the Social Security Trust Fund’s chief actuary.

Republicans, however, either missed that debunking or have willfully ignored it. With Congress nearing a deal to extend the cut through 2012, GOP leaders like Rep. Paul Ryan (R-WI), who as the House Budget Committee chairman has positioned himself as the party’s top budget and finance authority, is again pushing the false notion that the payroll tax cut will hurt Social Security, as The Hill reported today:

Ryan warned that the the move could erode the Social Security Trust Fund, which is funded by the payroll tax.

“Members on our side of the aisle are divided on this question. I personally have a problem with what happens with the Social Security trust fund. So people are divided on this; the Democrats agreed to it, I’d say I don’t really know what the number of Republicans are that agree to it, so they basically decided to bring it to the floor and let Congress work its will, and let people vote however they want to,” Ryan said during an interview with WLS Radio in Chicago.

As Jared Bernstein, the former chief economist to Vice President Biden, wrote in December, the payroll tax holiday was specifically crafted to protect Social Security by requiring the nation’s general fund to replace any lost revenues in the trust fund. The general fund, in fact, has made monthly transfers to replace the lost revenue since the holiday began, and Social Security hasn’t been touched. The proposed extension Congress is now debating contains the same protections.

And while Ryan now claims to have “a problem” with diverting funds out of the Social Security Trust Fund and worries about “what happens” if such a plan is followed, he didn’t have the same concerns last year, when he proposed a privatization plan that would divert $1.2 trillion — a whopping 1,200 times the size of the payroll tax cut extension — out of the Social Security Trust Fund, and would only restore that money over the next quarter of a century through deep benefit cuts.

Health

GOP Continues To Oppose Contraception Coverage Plan Now Supported By Large Catholic Institutions

The U.S. Catholic Conference of Bishops almost immediately rejected a compromise on requiring contraception coverage that the Obama administration announced on Friday, and Republicans have continued to attack the accommodation. Under the compromise, religious institutions will not be required to provide contraceptive coverage because insurers will provide contraception directly to employees at no cost, completely removing religious institutions from the equation. But this deal was not enough to satisfy conservative opposition.

On ABC’s This Week, Rep. Paul Ryan echoed the Republican objection of contraception coverage. Ryan told host George Stephanopolous the compromise is nothing more than a “fig leaf” and an “accounting trick”:

RYAN: To paraphrase the bishops’ letter, this thing, it’s a distinction without a difference. It’s an accounting gimmick or a fig leaf. It’s not a compromise. The president’s doubled down. [...] If this is what the president’s willing to do in a tough election year, imagine what he’s going to do to implement the rest of his health care law after an election.

STEPHANOPOLOUS: You heard Jack Lew right there, this is not going to force the institutions to pay for the coverage. [...]

RYAN: It’s a distinction without a difference. This is an accounting trick.

Watch his interview:

Ryan’s own heavily-Catholic home state of Wisconsin currently mandates contraception coverage without any exclusion for religious institutions. As ThinkProgress reported, Marquette University, a Jesuit institution located in Milwaukee, even decided to offer contraception coverage prior to the state’s mandate.

White House Chief of Staff Jack Lew repeatedly defended President Obama’s decision on several Sunday morning TV shows. “It does not force an institution that has religious principle to offer or pay for benefits that they find objectionable, but it guarantees a women’s right to access,” Lew said on Fox News Sunday. “Hopefully now this will set the issue to rest.”

And Ryan and his Republican colleagues are arguing against a policy that a majority of Catholic voters support and that major Catholic organizations favor, including the Catholic Health Association, the Association of Jesuit Colleges and Universities and Catholic Charities USA. The Rev. John Jenkins, president of the Catholic-affiliated University of Notre Dame, supported President Obama’s compromise, calling it a “a welcome step toward recognizing the freedom of religious institutions to abide by the principles that define their respective missions.”

As Republicans stand with the conservative Catholic bishops in opposition to allowing women to receive contraception at no cost, they are embracing an increasingly extreme anti-contraception position, with which even many Catholics disagree.

Health

Tom Coburn Inadvertently Calls Paul Ryan, Mitt Romney ‘A Liar’

Sen. Tom Coburn (R-OK) inadvertently referred to prominent Republicans like Paul Ryan, Mitt Romney, and Eric Cantor as liars during an interview with Oklahoma’s News on 6 Thusday night. “Any politicians that stands up and says, ‘We’re not going to touch your Medicare’ is a liar,” Coburn said, apparently forgetting that the GOP has used the talking point as a center piece in their campaign to sell Medicare premium support to the public. Watch Coburn’s remarks:

The GOP has repeatedly argued that it would preserve benefits for existing seniors:

– PAUL RYAN: “If you take a look at our reforms…[they] don’t change any Medicare benefits for a person 55 or above.” [Fox News, 1/29/2012]

– MITT ROMNEY: “We will never go after Medicare or Social Security. We will protect those programs.” [TPM, 1/31/2012]

– ERIC CANTOR: “To today’s seniors, those 55 and older, we’re not going to touch those programs. For the rest of us, we realize these programs won’t be around in their current state and we have to change the nature of those programs for the rest of us.” [CNBC, 4/13/2011]

It’s very very likely that beneficiaries 55 and older would see changes in their Medicare benefits under Ryan’s plan. In 2022, newly-eligible seniors would have to enroll in a private plan, but existing beneficiaries (those who are over 55 today) would also have the option of leaving traditional Medicare. That opens up the possibilities of private plans trying to lure away the healthiest beneficiaries (as is currently the case in Medicare Advantage) and of health care providers abandoning traditional Medicare patients for the higher reimbursement rates of private insurers. For chronically ill seniors who are more likely to remain in fee-for-service Medicare this means two things: higher costs (as the healthier beneficiaries exit the risk pool) and fewer doctors.

Health

FACT CHECK: Ryan Demagogues Health Reform, Misrepresents Premium Support Plan

During an appearance on Fox News Sunday, Rep. Paul Ryan (R-WI) pledged to reintroduce his plan to privatize Medicare as part of the GOP’s budget plan in March. “I would simply say, there’s an emerging bipartisan consensus that we’re on the right track,” Ryan told host Chris Wallace. “And the point is, we should be offering solutions to our problems in our country. We shouldn’t just be demagoguing other people and offering no solution.”

Ryan would do well to follow his own advise, as the indignant House Budget Committee chairman grossly misrepresented the Affordable Care Act and the details of his own Medicare premium support solution. Below is a brief fact check:

CLAIM — MEDICARE WILL GO BANKRUPT: “The Congressional Budget Office also says Medicare is going bankrupt in 2021. The trustees at Medicare say that there’s $37 trillion unfunded liability.”

FACT: The CBO says that one part of Medicare — Part A or hospital insurance — will become “insolvent,” not bankrupt. Dedicated revenues will not be sufficient to pay all of its bills and the hospital fund will meet about 90 percent of its commitments, rather than the full 100 percent. In the succeeding years that shortfall will slowly widen and then contract, so that in 2085, Medicare could pay out 88 percent of its obligations, the program’s trustees conclude. The savings in the ACA — lowering annual payment updates to providers — has actually extended the life of the trust fund by nine years.

CLAIM — NOTHING CHANGES FOR CURRENT SENIORS: “If you take a look at our reforms, which don’t change any Medicare benefits for a person 55 or above, and says for people 54 and below, when they’ll retire, they’ll have a list of guaranteed coverage options over by Medicare just like we do it in Congress and federal employees have, and we’re not going to subsidize the wealthy as much as everybody else.”

FACT: It’s likely that beneficiaries 55 and older would see changes in their Medicare benefits. In 2022, newly-eligible seniors would have to enroll in a private plan, but existing beneficiaries (those who are over 55 today) would also have the option of leaving traditional Medicare. That opens up the possibilities of private plans trying to lure away the healthiest beneficiaries (as is currently the case in Medicare Advantage) and of health care providers abandoning traditional Medicare patients for the higher reimbursement rates of private insurers. For chronically ill seniors who are more likely to remain in fee-for-service Medicare this means two things: higher costs (as the healthier beneficiaries exit the risk pool) and fewer doctors. Ryan’s proposal also does not resemble the “coverage options” of federal employees, because his “premium support” payments do not keep up with health care costs. The FEHBP’s do.

CLAIM — ACA WILL RATION CARE: “Put that in comparison to the president’s health care law. This year, he appoints 15 unelected, unaccountable bureaucrats to a board called the IPAD, Independent Payment Advisory Board, and their job is to put price controls and therefore rationing on Medicare for current seniors. So, the president’s law takes half a trillion dollars out of Medicare to spend on Obamacare and now he’s putting this new rationing board in place, which will lead to denied care to current seniors.”

FACT: The 15 members of the IPAB are appointed by the President, but confirmed by the Senate. The group is tasked with making binding recommendations to reduce expenditures in the Medicare system, unless Congress acts to alter the proposal or discontinue automatic implementation. Significantly, their proposal to reduce spending cannot “include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums…increase Medicare beneficiary cost- sharing (including deductibles, coinsurance, and co- payments), or otherwise restrict benefits or modify eligibility criteria” (Section 3403 (page 409) of the Affordable Care Act stipulates.)

Health

Boehner Promises To Revisit Medicare Privatization In This Year’s Budget

During an appearance on Fox News Sunday, House Speaker John Beohner (R-OH) confirmed that Republicans won’t be backing away from plans to privatize the Medicare program this year — despite voters’ rejection of the plan — and will attempt to “pursue a bipartisan Medicare proposal in order to deflect Democratic attacks”:

WALLACE: Will the House pass a budget this year, and will it have serious entitlement reform in it again such as last year’s proposal by Paul Ryan for premium supports (ph) as a way to change and reform Medicare?

BOEHNER: Well, that was one option on how we could save Medicare. There are other ideas. Paul Ryan and Ron Wyden, the Democrat senator from Oregon, came up with a bipartisan proposal. The idea here is that we’ve got to make changes to Medicare. Otherwise, it will not be there for seniors who count on it. So we will do a serious budget. But also, remember this: on Tuesday, it will be 1,000 days since the United States Senate passed a budget. One thousand days, and they have yet to pass a budget. How do you deal with the long-term fiscal problems that we have if you refuse to come to an agreement on a budget?

WALLACE: So I want to make it clear, because there had been some thought that maybe because of the hits that you guys took last year, you weren’t going to pass a budget. You are going to pass a budget again this year?

BOEHNER: Of course we are.

Watch it:

House Budget Chairman Paul Ryan (R-WI) echoed Boehner’s sentiment at the House Republican retreat in Baltimore on Friday, telling Reporters, “We’re not backing off on the kinds of reforms that we’ve advocated, but we have to write it.” “We’ve done more to normalize the idea of premium support than anything at all. We’re confident that these are the right policies. There’s an emerging bipartisan consensus that’s occurring on doing premium support reform to Medicare is the best way to save Medicare.”

Only one Democrat in the Senate, Ron Wyden (D-OR), has publicly embraced a watered down version of Ryan’s premium support proposal, but the plan — which would preserve traditional Medicare as an option for seniors and offer premium support credits that would do a better job of keeping up with health care costs — was rejected by Congressional Democrats and the White House. They argued that no version of premium support can achieve real savings without adverse consequences for beneficiaries, noting that the proposal could significantly shift costs to beneficiaries and fail to fully prevent private health insurance plans from attracting healthier beneficiaries and driving up premiums for those who remain in traditional Medicare.

In fact, there is very little evidence to suggest that private plans have or can do a better job of lowering spending. Medicare’s sheer size and bargaining clout have contributed to its greater success in controlling health care costs and the program has introduced market innovations and payment reforms that were later adopted by private industry. The Affordable Care Act will build on this structure by investing in new demonstration projects and payment reforms that will reward providers for delivering care more efficiently and — ultimately — lower the rate of growth in health care spending.

NEWS FLASH

TV Stations Dismiss PolitiFact’s ‘Lie Of The Year’ Argument | PolitiFact’s ‘Lie of the Year’ designation isn’t carrying water with T.V. executives since Rep. Charlie Bass (R-NH) failed to convince WMUR and WHDH to yank a Progressive Change Campaign Committee advertisement that accused the Congressman of voting to end Medicare by supporting the Paul Ryan budget, Greg Sargent discovered yesterday. The fact-check organization named the oft-repeated claim as the biggest deception of 2011 and continues to stand by its decision, despite bipartisan criticism of the ruling. “Our lawyers looked at the ad and concluded it’s within the bounds of robust public debate,” Jeff Barlett, the general manager of WMUR, told Sargent. “If Charlie Bass and his supporters disagree with this, they’re free to create their own ad and tell their side of the story.”

Health

Ron Paul: Charities Should Provide Health Care To The Uninsured

Ron Paul told a town hall audience in New Hampshire that uninsured Americans should rely on charity for health care and said the modern health system “is overly corporate and not much better than a socialized healthcare system.” The Concord Monitor reports:

He said reducing the size and cost of government would give more people the financial ability to make charitable donations and support the sick and indigent in their communities. “There was a time in the ’50s and early ’60s, people were not lying out in the street not getting medical care. Charities and hospitals stepped up,” he said, pointing to President Lyndon Johnson’s introduction of Medicare and Medicaid as ruining health care and replacing it with “corporate medicine.” “It’s not socialized medicine, but it’s not a whole lot better,” he said.

One man said his daughter is sick and will soon not be covered on her parents’ health insurance. “Will she have to wait in line at a charity hospital?” he asked Paul.

“She’ll have to wait in line under Obamacare, that’s for sure,” he answered, before drifting into a long, twisting answer about how a completely free market-based health care solution would improve the system.

The charity care line is gaining popularity as an alternative to the Affordable Care Act in the GOP presidential primary, as both Newt Gingrich and former presidential candidate Michele Bachmann have suggested that charities should be responsible for providing health care to those who can’t afford it. While the organizations served as important safety net in the era before Medicare and Medicaid, they would have little capacity to address the needs of today’s 50 million uninsured — and would certainly do very little to reduce health care costs or minimize the cost-shifts that result from uncompensated care.

In fact, for any politician to argue that government should outsource the task of keeping Americans healthy to charities is like saying that people should be punished with death if they are unfortunate enough to be poor or are priced out of insurance due to a pre-existing health condition.

Health

Rick Santorum: Republicans ‘Trust’ Private Health Insurers To ‘Drive Down Costs’

Rick Santorum promised to expedite the implementation of Rep. Paul Ryan’s (R-WI) Medicare privatization plan during a town hall in Northfield, New Hampshire this afternoon, saying that today’s seniors should receive a premium support subsidy to purchase coverage from private insurers. Ryan’s original budget proposal — which most House Republican supported — exempts current enrollees and doesn’t kick in until 2022. In that year, people turning 65 will receive a pre-determined “premium support” payment to purchase private insurance. But since the government’s contribution would be indexed to inflation and fall behind actual health care costs, by 2030 the proposal would “only cover 32 percent of a typical 65-year-old’s total health care spending.”

Proponents of the plan argue that opening up Medicare to greater private competition would ultimately lower health care costs, but today Santorum admitted that if the GOP’s “trust” in insurers’ ability to lower spending is misplaced, seniors will be forced to spend more on health insurance:

SANTORUM: In Medicare, we’re saying, trust the private sector to drive down costs and it’s a belief that that will happen. And if it doesn’t of course seniors will have to participate more in the increasing cost of health care. So there is a downside, I freely admit that.

Watch it:

In fact, there is very little evidence to suggest that private plans have or can do a better job of lowering spending. Medicare’s sheer size and bargaining clout have contributed to itsgreater success in controlling health care costs and have allowed it to introduce market innovations and payment reforms that were later adopted by private industry. Here is the per-beneficiary comparison:

As Paul Krugman points out, “if Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper.”

Health

PolitiFact’s Pants On Fire For Choosing ‘Ryan Will End Medicare’ As ‘Lie Of The Year’

This morning, PolitiFact announced that the Democrats’ charge that Rep. Paul Ryan (R-WI) budget will end Medicare is the biggest lie of the year — even though it’s 100 percent true!

Here is why: Ryan’s plan ends traditional fee-for-service program and forces all future retirees to ultimately enroll in private coverage.

Under his proposal, beginning in 2022, people turning 65 will receive a pre-determined “premium support” payment to purchase private insurance. Insurers will offer a basic package of benefits, but traditional Medicare — the program that President Lyndon Johnson enacted in 1965 — will literally stop enrolling new beneficiaries. Rather than paying health care providers directly — and using its market clout to secure better bargains and other efficiencies for enrollees — the government would now pay multiple private health insurers pre-determined amounts per beneficiary to act as middle men between patients and providers.

It will no longer guarantee seniors a defined package of benefits, but will instead only offer a defined contribution towards their health care costs. As the Congressional Budget Office (CBO) analysis of Ryan’s proposal explains, “the payment for 65-year-olds in 2022 is specified to be $8,000, on average, which is approximately the same dollar amount as projected net federal spending per capita for 65-year-olds in traditional Medicare.” However every subsequent year, as health care costs increase, the government’s contribution “would grow at a slower rate,” inflation, and the age of the enrollee. By 2030, under the proposal, the premium support would “only cover 32 percent of a typical 65-year-old’s total health care spending” and would decrease every subsequent year.

PolitiFact concedes that this is, in fact, “a huge change to the current program.” But it’s more than that. Capping costs to beneficiaries, closing the traditional fee-for-service program, and forcing seniors to enroll in new private coverage, ends Medicare by eliminating everything that has defined the program for the last 46 years.

Health

Health Care Experts Warn That Wyden/Ryan Plan Will End Guaranteed Access To Care For Seniors

A group of progressive health care policy analysts are pushing back against the Wyden/Ryan Medicare reform plan this morning during an event at the Brookings Institute. The analysts — Urban Institue’s Judy Feder, the Center for Budget and Policy Priorities’ Paul Van de Water, and Brookings’ Henry Aaron — will argue, in remarks obtained by ThinkProgress, that shifting beneficiaries from Medicare to a series of private health insurance plans would undermine Medicare’s “guaranteed equitable access to affordable health care” and place seniors care in the untested — and at times untrustworthy — hands of private insurers.

Relative to private insurance, Medicare’s performance “is quite impressive,” even superior, they will argue:

– RISK POOLING: Medicare does a terrific job at what any successful insurance plan must do. It pools risks without regard to people’s health status. Private insurers, in contrast, make money…by serving the healthy and avoiding the sick.

– MARKET POWER: Tens of millions of purchasers in a single pool also give Medicare the edge in dealing with providers, who are increasingly concentrated and therefore effective in driving up payments where they can. Medicare pays hospitals about 30 percent less than private insurers do; it pays physicians about 20 percent less. Whether because insurers lack the clout (or, in some cases, the market pressure), private insurers have been markedly ineffective in resisting provider pressure to increase payment rates.

– LOWER PREMIUMS: CBO finds that Medicare premiums, currently estimated to be 11 percent lower than private insurance premiums for the same benefit package, will be about 30 percent lower by the end of the next decade.

– LOWER COST GROWTH: But when it comes to what health care cost per person, Medicare’s growth rate is remarkably low. As a result of payment changes in the Affordable Care Act, Medicare per capita spending is projected to grow at an average rate of about 3 percent per year—as much as a point below per capita GDP growth.

While Feder, Van de Water and Aaron share Wyden/Ryan’s goal of reducing health care spending, they argue that there is little evidence to suggest that competition between private insurers could reduce the cost growth and that the existing premium support proposals “lack the regulatory teeth necessary to make premium support even worth considering.”

“The average Medicare enrollee today may choose among an average of 24 plans, in addition to traditional Medicare, including 10 health maintenance organizations.” And while some private plans are better at controlling costs than others, they can and do cherry pick healthier enrollees by varying the scope of benefits offered and still “fall short in the adequacy of its network, waiting times, customer services, and other factors.” Meanwhile, government is still unable to level the playing field or enforce and maintain fair competition. The “current risk-adjustment technology” is inadequate to prevent adverse selection, particularly since insurers — always concise of maintaining profit margins — “are trying to withhold data necessary to assure that risk adjustment under the Affordable Care Act.” They’re also fighting to undercut regulations that require all insurers to offer a basic set of essential benefits “by proposing that the essential health benefits package be defined in terms of a dollar value rather than a specific set of covered services.”

Finally, as Aaron will observe, given that per-person spending under Medicare “is three times that on those who will be served under the ACA, and variation in spending is correspondingly larger,” the government’s task of inserting greater competition into Medicare “would be vastly harder,” while “The profit from cream-skimming [for insurers] is that much greater.” And beneficiaries themselves could be at a disadvantage when choosing between competing plans. The Medicare population “contains many people with mental disabilities and early or advanced mental decline…to think that providing ‘clear and easy to understand information’ equips those with mental disabilities or early-state dementia to deal with competing insurers is delusional.”

Update

Brookings has also issued a more comprehensive paper here.

Update

CBPP’s Paul N. Van de Water explains how the plan would shift costs to beneficiaries in a new analysis here.

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