Maybe the most compelling product of President Barack Obama’s deficit commission isn’t even in its groundbreaking final report.
It’s the bipartisan proposal by the panel’s health care subcommittee, former White House budget director Alice Rivlin and Rep. Paul Ryan (R-Wis.), to keep Medicare and Medicaid from overwhelming the federal budget.
And it’s a market-based step toward a better national health care reform than Obamacare, which Ryan — and many other experts in both parties — believe will explode health costs, not contain them.
For future retirees, Rivlin and Ryan propose to convert Medicare, now a “defined benefit” program with open-ended costs, into a “premium support” plan such as the Federal Employees Health Benefits Program, relying on patient choice and market forces.
And they’d convert Medicaid, the state-federal health plan for poor people, into a block grant to the states, allowing them to experiment with delivery and cost-containment.
Even though Rivlin — President Bill Clinton’s budget director — has impeccable Democratic credentials, Democrats on the Obama debt commission opposed the plan and it was dropped.
Rivlin included a version of it in the report of another bipartisan debt commission she headed along with former Sen. Pete Domenici (R-N.M.).
During 2010 Congressional races, Democrats systematically demonized Ryan’s health care ideas as the ruination of Medicare’s guarantee to seniors. But, as Ryan notes, most GOP candidates targeted with that message won.
At a Christian Science Monitor press breakfast, and in an interview, Ryan said: “I’m not ripping up Medicare. I’m making sure Medicare works for the 21st century.”
And the incoming chairman of the House Budget Committee described himself as having been mentored by the late Rep. Jack Kemp (R-N.Y.), believing in “a prosperous opportunity society built atop a solid safety net.”
“I am not a laissez-faire, Hobbsian libertarian,” he told me. “I believe in a circumscribed safety net, one that helps people get back on their feet and is there for people who can’t help themselves. But I believe in a pro-growth, limited-government, free-enterprise society that encourages people to make the most of their lives.”
At the breakfast, he said, “we’re on a path to being a European-style social democracy” and that Republicans need to “accentuate the differences philosophically” with the Obama administration — “not in a mean and sinister way, but in a constructive way to give the country a real clear choice.”
He said he doubts it will be possible for Republicans to reach any major agreements with Obama on health care over the next two years, “but I’d love to get a deal on something” to prove — especially to world markets — “that these Americans aren’t crazy, their system is not broken and they can do something to control their debt.”
Ryan praised much of the work of debt commission, headed by former White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R-Wyo.), though he voted against its final report.
He said he did so “because it didn’t address the elephant in the room: health care. ... If you’re going to fix this fiscal crisis, you’ve got to take on health care.”
The Bowles-Simpson commission’s recommended cancellation of the tax exclusion for employer-based health care plans “accelerates the expansion of Obamacare,” which he’s convinced will cause employers to transfer millions of workers into government-subsidized exchanges, exploding costs.
Though the administration and the Congressional Budget Office claim Obamacare can save money, Ryan said, “all the other actuaries, including Medicare’s, tell us that 100 million people eventually will end up in these exchanges.”
Rivlin and Ryan did not come up with a plan to reform Obamacare, but to control costs for the two biggest government health programs, Medicare and Medicaid, to 1 percent above the growth rate for gross national product.
Currently, the programs are growing at double that rate.
Under their plan, “we’d grandfather the grandparents,” Ryan said, allowing current retirees and those over 55 to keep fee-for-service Medicare, in which government sets fees for procedures and pays for as many as a patient receives.
But younger workers would be given a payment based on income and allowed to purchase private insurance through a regulated exchange.
Older and sicker patients would receive higher payments, encouraging insurance companies to offer policies to them.
Obamacare — and the debt commission — propose to contain costs by “top-down price controls and rationing, which have been tried again and again and never work,” Ryan said.
“We control costs by individual choice and market-based mechanisms,” he told me.
That system works for the Medicare Part D prescription drug benefit, which is costing 40 percent less than originally estimated while the rest of Medicare is going broke.
Because it wasn’t part of the Obama commission’s final report, the Rivlin-Ryan plan has received much less attention than it deserves. It represents a bipartisan convergence that is the only path out of America’s debt crisis.