Reforming Entitlements Needs Consensus

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Ron Brownstein at National Journal reviews the recent history of efforts to restructure entitlements such as Medicare and Social Security. With bipartisan consensus, he argues, it can be done; without, especially if the purpose is to limit rather than expand entitlement spending, the record is poor.

Some people celebrate good fortune by visiting Disneyland or Las Vegas. Republicans often commemorate success by beating themselves bloody against the foundations of America's social safety net.

The sweeping budget blueprint that House Budget Committee Chairman Paul Ryan, R-Wis., released this week marked the fifth time since 1980 that Republicans have followed an electoral breakthrough by attempting to restructure Medicare or Social Security. Each of the previous efforts ended in tears, largely because the GOP's approach failed to attract support beyond its core coalition. Ryan's plan, by seeking to end Medicare as it now exists, reprises the same risk--at a time when the GOP is growingly increasingly reliant on votes from white seniors.

Brownstein's piece should disturb Republicans, but one wonders whether it will.

A lexical clarification. Ryan's plan to reform Medicare is based on converting the program to what most observers call a "premium support" model. Henry Aaron of the Brookings Institution (along with Robert Reischauer) coined that term, but meant something different by it--namely, cash payments indexed to health-care costs, rather than to a wider economic index, such as consumer prices, as Ryan proposes.

The defining attribute of the plans that Reischauer and I christened "premium support" was that the amount of support was to be indexed to average health care costs, not, as in voucher plans, to a price index or per person income.  If savings were to result from the exercise of consumer choice and market discipline, that would be well and good, we argued.  But savings should not come from erosion of the adequacy of support resulting from linking the payment to a slowly growing index.  This difference is crucial.  Voucher plans are virtually guaranteed to become increasingly inadequate; premium support plans will not.

Aaron wants his term of art returned. Ryan's budget document adds insult to injury, I notice:

This is not a voucher program, but rather a premium-support model.

Says who? In future I will try to say "voucher".


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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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