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Forbes.com

 

Top Obama Advisers Proposed Voucherizing Medicare Way Back in...2010?

September 13, 2012

By Avik Roy

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Last week, I noted the strange fact that President Obama—and his top advisers—decry the Romney-Ryan plan for Medicare reform, because it incorporates the concept of "premium support," while applying the same principles to 25 million low-income Americans under Obamacare. Thus far, the Obama campaign has been unable to account for this inconsistency. Well, on Monday, we learned that a top Obama health-care adviser actually proposed going around Congress to voucherize Medicare, in his words, just two years ago. It’s time for President Obama to own up. Either the Romney-Ryan plan is sound, or Obama’s campaign is being dishonest.

(DISCLOSURE: I am an outside adviser to the Romney campaign on health-care issues. The opinions contained herein are mine alone, and do not necessarily correspond to those of the campaign.)

Meghan McCarthy of National Journal obtained internal White House emails documenting that two key Obama health-care advisers—David Cutler of Harvard and Jonathan Gruber of MIT—proposed that Obama privatize the Medicare program as part of the negotiations surrounding the Bowles-Simpson deficit commission in 2010, in ways that were well to the right of what Mitt Romney has proposed.

"How about this…removing the special status of [traditional] Medicare," Cutler wrote, according to McCarthy. Obama’s fiscal commission should support "moving the Medicare population into the [Obamacare] exchanges…that would be the same as the voucher" proposed by Rep. Paul Ryan and former Clinton budget Chief Alice Rivlin, in what became known as the Rivlin-Ryan plan.

What’s even more remarkable about Cutler’s suggestion, according to McCarthy, is that Cutler proposed enacting this reform by going around Congress. Cutler proposed using Obamacare’s new Medicare rationing board, the Independent Payment Advisory Board, to impose such a reform upon seniors without Congressional amendment.

I happen to think that privatizing Medicare is a good thing. But imposing that change upon the country—without going through the normal democratic channels—is certainly aggressive, and takes Cutler’s change of heart to another level. This is the same David Cutler, we must note, who three weeks ago published a blistering and factually inaccurate critique of the Romney-Ryan plan, claiming that it would "harm all seniors" by bringing modest and well-established reforms to the program. As McCarthy noted, "That is a proposition you won’t hear in talking points from either Cutler or the Obama campaign."

For better or worse, I don’t believe IPAB has the authority under the Affordable Care Act to migrate seniors to the exchanges. The law as written explicitly bars IPAB from changing Medicare’s cost-sharing provisions. So Congress would have to expand IPAB’s power in order to achieve Cutler’s goals.

Cutler wasn’t alone among Obama’s advisers in supporting the privatization of Medicare. MIT health economist Jonathan Gruber also supported the Rivlin-Ryan premium support plan. "So overall I like this proposal for Medicare," Gruber wrote. When interviewed by McCarthy, he explained, "In theory, [premium support] is not wrong."

Gruber added a caveat to his endorsement: that premium support for Medicare made sense on top of Obamacare’s premium-support plan for low-income Americans. "Without broader health reform, I don’t think it works," he wrote. Gruber now claims that premium support is an unproven idea. "In the first few years of the insurance exchanges we will learn a lot," Gruber tells McCarthy, but we need to treat Obamacare as an experiment:

"First, policymakers have to figure out how to keep insurance companies from cherry-picking healthy people and essentially forcing the sickest patients on to traditional Medicare, which would drain the program of money. Second, policymakers must find a way to make sure insurance companies design benefits so they are easy-to-understand for beneficiaries, and don’t trick seniors into buying more expensive plans that aren’t suitable for them. Third, they have to figure out just how quickly government checks for seniors to buy coverage could grow."

It’s a game attempt by Gruber to defend his position. But there are two flaws to his argument. First: Gruber has observed six years of a similar system in Massachusetts, a system that he personally designed. Experimentation, in that instance, was perfectly okay. Gruber frequently cites the Massachusetts experience in support of what Obamacare imposes nationwide, but for whatever reason, now has a different position in this specific case.

Second: if Gruber thinks premium support is some sort of mad-scientist experiment—which it clearly is not, given the usage of similar approaches in Medicare Advantage, the Medicare drug benefit, and the federal employee health benefits program used by 8 million Americans—why is it okay to experiment on low-income Americans so as to protect wealthy seniors?

The irony is that the Obamacare exchanges embody all of the criticisms that Democrats falsely level against the Romney-Ryan plan. Unlike Romney-Ryan, the Obamacare subsidies grow at a fixed rate, even if health insurance costs grow more quickly, exposing recipients to excess premium growth. Romney-Ryan’s premium-support payments are designed, in contrast, to keep pace with medical inflation, and have no growth cap. (Cutler’s analysis of Romney-Ryan erroneously introduces a growth cap upon the premium-support subsidies.)

I’ll say this for Gruber’s point of view. The minority of Democrats who think about entitlement reform echo his sentiment about making changes to Medicare and Medicaid, while keeping the ACA in place. In their model, Republicans will fail to repeal Obamacare, and more and more seniors and Medicaid beneficiaries will be migrated onto Obamacare’s exchanges, such that Medicare and Medicaid’s liabilities will decrease while the exchanges grow.

David Cutler, on the other hand, has long been an advocate for private health care, well before anyone had imagined such a thing as Obamacare. In 1999, as a principal adviser to Bill Bradley’s presidential campaign, Cutler advocated eliminating Medicaid and the Children’s Health Insurance Program (CHIP) and replacing those programs with…refundable tax credits for the purchase of private health insurance. The Cutler of today would call that a "voucher" that would devastate the poor.

The David Cutler of 1999, and the David Cutler of 2010, were well-known as liberal health policy experts who were respected by policymakers on both sides. I’m not sure what to make of the David Cutler of 2012, however. Perhaps the details of Cutler’s White House e-mails contain exonerating information. Logically, however, it’s hard to reconcile his approach—and that of his fellow-travelers—with his over-the-top criticisms of the Romney-Ryan plan.

It’s high time for journalists who take their roles seriously to start doing their jobs. The next time an Obama surrogate is on television, demagogically declaring that Romney-Ryan is a "voucher" program that will "end Medicare as we know it," the surrogate’s interlocutor should ask: if Romney-Ryan is so bad for seniors, why did Democrats vote for premium support for 25 million low-income Americans? Why did Obama’s top advisers favor privatizing Medicare as recently as 2010? Anyone who doesn’t ask—or answer—these questions owes America an explanation.

Original Source: http://www.forbes.com/sites/aroy/2012/09/13/top-obama-advisers-proposed-voucherizing-medicare-way-back-in-2010/

 

 
 
 

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