Paul Ryan's Budget Gamble: Ending Medicare As We Know It

When Rep. Paul Ryan revealed his budget "roadmap" in 2010, House Speaker John Boehner, then the Minority Leader in the House, tip-toed quietly away from the cameras. Other Republicans followed his lead, sneaking behind Capitol curtains when asked to comment. Democrats shouted down the plan's austere changes to Medicare, Medicaid, and Social Security. The plan was dead on arrival, analysts said. The GOP would never embrace a plan that would take away Americans' favorite programs, right?

Wrong. Rescued from the shadows, Ryan's controversial roadmap is now the template for the GOP's 2012 budget proposal -- the most controversial and comprehensive overhaul of the U.S. entitlement system proposed by a major party in decades.

The plan would turn Medicare into a voucher system that would cap medical assistance for most seniors at $15,000. It would take the federal reins off Medicaid and turn the low-income health care program into a block grant to states. If it mimics Ryan's other ideas, it would create an option to privatize Social Security and dramatically cut taxes for the rich.

The big picture: Today, most budget experts agree our health care promises are impossible to fulfill in the next few decades. They also agree that Americans would never accept any serious attempt to change them. Paul Ryan is betting that they're right about the first part and wrong about the second.

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Thumbnail image for 570 socialsecuritymedicare.png

Take a long look: This graph is the beating heart of Washington's budget debate. It shows the hydra health care monster opening its mouth in mid-century and gobbling up all government revenue within a generation or two.

This picture is a partisan Rorschach test. Washington promised to pay for every senior's health care. We can't. Paul Ryan's sees the graph and says, "Let's change our promise." The White House's sees the graph and says, "Let's change health care."

Ryan wants to change Medicare from a fee-for-service system to a voucher program so that old folks go out into the market and buy their own insurance, while the government picks up the first part of the tab. The White House, however, wants to fire a thousand arrows at the health care inflation beast -- making small tweaks to the way doctors collect and share information, the way hospitals handle out-patients, and so on. The hope is that we can continue to keep seniors under our wing once we've made health care more affordable.

Put another way, Ryan hopes that cutting Medicare will force health care to change. The White House hopes that forcing health care to change will slow Medicare spending.

Three more thoughts until the budget comes out later this week and we have more details:

1) Ezra Klein is right: Say what you what about the tenants of Ryanism, man, but at least it's an ethos. Dude's got cojones.

2) ... or maybe he's just a savvy negotiator! A far-right opening bid for budget reform might be a plot to make Democrats settle for a center-right proposal that spares Medicare but still manages to block-grant Medicaid.

3) I'd like to give health care reform a chance to work, which is why I'm resistant to harsh rationing plans like Paul Ryan's. But let's be serious: Rationing will be a part of health care reform eventually, whether it comes from the government limiting the health plans available to median-income patients or government limiting the money it will spend on health plans available to median income patients. Washington can't keep cutting blank checks for a service whose price is increasing faster than the economy is growing.



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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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