Republican Ryan for the Rebound

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While health care reform remains near the bottom of the list of the public’s concerns, with recent polling averaging at 53% opposed to the Democrat’s plans, policymakers realize the impact of future medical and Medicare costs still matter. They exert direct influence one of the biggest concerns Americans have: the ballooning deficit and burgeoning public debt.

The filibuster proof Democratic caucus failed to secure the left’s preferred vision of health care reform over the course of the last year. Now, President Obama is reaching out to Congressional members, even those on the Republican side of the aisle.

Ditching the straw man argument that the GOP wants to “do nothing”, the President has confirmed that some proposals have merit. Rep. Paul Ryan (R-WI) was engaged by the President regarding Ryan’s proposed Roadmap for America’s Future Act for 2010 at the February 1st Republican conference:

President Obama: I think Paul [Ryan], for example, the head of the Budget Committee, has looked at the budget and has made a serious proposal. I’ve read it. I can tell you what’s in it. And there’s some ideas in there that I would agree with but there’s some ideas we should have a healthy debate about because I don’t agree with them.” The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. Nothing comes close. That’s going to be what our children have to worry about. Now, Paul’s approach, and I want to be careful not to simplify this, I know you’ve got a lot of detail in your plan, but, if I understand it correctly, would say, we’re going to provide vouchers of some sort for current Medicare recipients at the current level – No?

Congressman Ryan: No – we protect the program for Americans 55 and above [those in and near retirement]…

Obama: I understand – there’s a grandfathering in….That’s why I said I wanted to make sure that I’m not being unfair to your proposal. I just want to point out that I’ve read it, and the basic idea would be that, at some point, we hold Medicare cost per recipient constant as a way of making sure that that doesn’t go way out of whack, and I’m sure there some details…

Ryan: We increase the Medicare payments with a blend of inflation and health inflation. The point of our plan is, because Medicare as you know is a $38 trillion unfunded liability.

Obama: Right.

Ryan: It has to be reformed for younger generations because it won’t exist. It’s going bankrupt. The premise of our idea is look, why not give people the same kind of health care plan we here have in Congress? That’s the kind of reform we’re proposing for Medicare. [applause]

The CBO scored Ryan’s proposal with some favorable findings:

The Roadmap, in the form that CBO analyzed, would result in less federal spending for Medicare and Medicaid as well as lower tax revenues than projected under CBO’s “alternative fiscal scenario” described in CBO’s June 2009 publication The Long-Term Budget Outlook. Federal spending for Social Security would be slightly higher than under CBO’s alternative fiscal scenario for much of the projection period, but the system would become sustainable as revenues increase and traditional benefits decline. The budget deficit would peak at 5 percent of GDP in 2034 and then decline. By 2080, the Roadmap would generate a budget surplus of about 5 percent of GDP. Under the Roadmap, the ratio of government debt held by the public to economic output (the ratio of debt to GDP) would be lower than that under the alternative fiscal scenario in every year. In particular, debt is projected to peak at 100 percent of GDP in 2043 and to decline thereafter, reaching zero by 2080. (Debt held by the public was about 53 percent of GDP at the end of fiscal year 2009.) The federal government would accumulate net financial assets equal to 17 percent of GDP by 2083. In contrast, under the alternative fiscal scenario, debt is projected to skyrocket over the next several decades.

The Roadmap accomplishes this by implementing notable reforms to Social Security and Medicare that should find bi-partisan agreement.

The Heritage Foundation analyzed the bill for its impact on non-seniors, and concluded:

The Ryan bill outlines clear, sound principles to reform entitlement spending and health care. The Roadmap’s health care provisions would bend the cost curve in health spending, make insurance more affordable and accessible, and create a consumer-driven, highly-competitive system.

The Roadmap addresses health insurance coverage for non-seniors in three ways. First, changing the tax treatment of health care insurance enables a transition from an employer-based tax exemption to individual tax credits to put the consumer back in the driver’s seat, a key component of reducing health care insurance costs. You pay more attention when you know the cost will impact you and your personal insurance rates (people are often more careful about filing a claim with their auto insurance company than they are with their employer’s health insurance policy).

Secondly, state based exchanges and reforms are encouraged through a Federal-state partnership, allowing our states, the “laboratories of democracy”, to find new and innovative ways to cover the uninsured.

Finally, allowing interstate purchases of insurance allows a wider national pool of consumers to be built by the insurers, lowering costs by spreading risks in an actuarilly sound manner.

Rep. Ryan is a thoughtful, smart guy who moves beyond rigid partisanship to find solutions worthy of consideration. It remains to be seen if the highly partisan atmosphere in Washington DC can accommodate his ideas.

Cross posted to FrankHagan.com