The Main Event Part 2

Today is the day that Paul Ryan will unveil the House budget for FY2012. He has released this video, which shows some of the numbers that should be of great concern to all. He is taking some incoming flak, although counter-proposals from the Democrats seem scant. Ezra Klein has been a critic, pointing out that Ryan’s plan, which does nothing to stop the rapid increase in health costs, achieves savings through cuts, not reform. He posits that since Ryan cuts benefits without addressing the underlying issues of health care costs, many will be left behind.

In both cases, what saves money is not the reform. It’s the cut. For Medicare, the cut is that the government wouldn’t cover the full cost of the private Medicare plans, and the portion they would cover is set to shrink as time goes on. In Medicaid, the block grants are set to increase more slowly than health-care costs, which is to say, the federal government will shoulder a smaller share of the costs than it currently does. The question for both plans is the same: What happens to beneficiaries?

The answer to the question posed by Klein is that without additional revenues dedicated to medicare and medicaid many beneficiaries will eventually have a much more difficult time affording health care. It is cost shifting, pure and simple. But the question that needs to be asked is, if not Ryan’s plan then what? I do believe that Ryan’s numbers as to where the budget is going in the years to come are correct. So we either need to cut system expenses (either via cost shifting or reforms that try to tackle the growth in health care inflation) or we leave the system where it is and raise sufficient revenues to address the massive systemic financial problems of the entitlement programs. Ryan opts for cost shifting. The Main Event is about to begin. Read the Paul Ryan op-ed Wall Street Journal piece here.

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