The Unkindest Cut
David Leonhardt has a column today entitled "Health Care's Obstacle: No Will to Cut." Unlike many headlines, this accurately sums up the thrust of the piece. Leonhardt complains, with justification, that alternative plans also have big holes: Paul Ryan's plan is all well and good, but it would never get through Congress intact.
But I don't think, as Leonhardt seems to think, that this particularly weakens the case of reform's opponents; after all, proponents have the same problem. Proponents of reform have been acting as if the fact that various Democrat plans have been scored by the Congressional Budget Office as "deficit neutral" somehow means that they couldn't possibly be worse than the status quo. This is extraordinarily wishful thinking. For one thing, as Greg Mankiw points out today (and I have previously argued), even a success will leave us worse off in one key respect: we'll have used up the easiest, most obvious cuts that otherwise would have been used to deal with our rapidly growing Medicare problem.
The best answer that proponents have to this is that we are dealing with our Medicare problem by "bending the cost curve." But such "bending" through the excise tax on high cost plans is highly speculative: it's not all that likely to ever happen. (Notice how many times it has already been amended and pushed back just to pass the bill?) If it does happen, it might not much alter private health care spending. Even if it did push down the rate of health care inflation in the private sector, that doesn't necessarily mean that this would translate into lower government spending.
But that's not the only reason to worry. If the cost controls fail, we aren't just right back where we started: we're much, much worse off. As you may have noticed, broad-based entitlements are nearly impossible to cut, much less repeal, which is why so many progressives are willing to sacrifice the current majority on the pyre of national health care. So there's a not-insignificant chance that we'll end up with a broad-based entitlement that we can't cut and can't pay for. Hello, budget crisis.
Of course, if we can't cut Medicare, we'll end up there anyway. But with a budget crisis, "getting it over with as quickly as possible" is not the best strategy. Moreover, the new entitlement probably makes it harder to reform either Medicare, or health care spending as a whole. It adds new interest groups to the mix, which always makes reform harder. Especially in this case, where seniors will resist any cuts that aren't matched in the under-65 program, and vice versa.
Leonhardt closes his column thusly:
Beyond these last-minute improvements, I see only two good options for anyone who wants to be fiscally conservative.The first is to say we cannot afford to cover the uninsured. Our health care efforts should instead start with building support for specific measures that can be shown to save costs. Who are the members of Congress who will support these measures, and how soon can they be passed?The second option is to say that expanding insurance would bring enormous benefits. It would allow people to get treatments -- diabetes care, dialysis, chemotherapy, you name it -- that they are now skipping. According to one conservative estimate, universal coverage would save "probably thousands if not tens of thousands" of lives a year.Yet we can't afford simply to expand insurance. We also need to pay for the expansion -- and to pay for the health system we already have. Some attempts at cost control will make us uncomfortable, because we can't be sure that they will cut back only on wasteful care. All attempts will involve uncertainty.
I'm interested to know who's skipping dialysis because they can't afford it, given that this is the one piece of medical care that is guaranteed by the United States government. But this is quibbling. Why can't fiscal conservatives say that if we want to have the entitlement, we should first make sure the cuts we're proposing work? Why can't they say that we can't afford this particular expansion, and that it's time to go back to the drawing board? "The fierce urgency of now" is obviously totally compelling to those who think nothing can go wrong, but for the rest of us, it's not a good reason to commit ourselves to a very risky course of action.