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Say goodbye to Medicare



Last week House Budget Committee Chairman Paul Ryan put out a budget that would leave the vast majority of future retirees without decent health care – by ending Medicare as we know it. According to an analysis of Ryan’s budget by the nonpartisan Congressional Budget Office (CBO), by 2030 most middle-income retirees would have to pay almost half of their income to purchase a Medicare- equivalent private insurance package. And they would pay much more than half of their income in later years.

Once upon a time this sort of assault against the living standards of the middle class might have been expected to draw an outraged response. Instead the Washington pundit corps rallied around Mr. Ryan’s plan to deal with the problem of runaway entitlement spending, crediting him for offering a “serious” proposal even if they did not embrace every last detail.

If there has been any lingering doubt that our political system is controlled by an elite few who are completely removed from the bulk of the population, this response to the Ryan plan ended it. In point of fact, there is nothing at all serious about the Ryan plan. It’s nothing more than a naked attempt to redistribute yet more money to the country’s rich at the expense of everyone else.

The proposal to end Medicare relies on market efficiencies to get health care costs under control. Wait: haven’t we tried this before? Has Ryan never heard of the Medicare Advantage plans offered by private insurers – plans that cost taxpayers substantially more than traditional Medicare coverage? Doesn’t he know that we’ve already had ample opportunity to witness the effectiveness of private insurers in containing health care costs in the non-Medicare insurance market?

Based on this extensive experience, we know that the private insurance market doesn’t control costs. This is why CBO calculated that Ryan’s plan would hugely raise the cost of health care for seniors. If every senior were to get a Medicare equivalent policy under Ryan’s plan (forget for the moment that most won’t be able to afford it), the added cost of his system would be more than $20 trillion over the next 75 years.

This works out to more than $60,000 for every man, woman and child in the country. That would be money taken out of the pockets of ordinary workers and retirees that will go to the insurance and pharmaceutical industries along with providers of high-tech, high-cost medical services.

When it comes to redistributing money upward, mainstream commentators always seem eager to join in. Last week pundits from across the political spectrum had a hard time containing their enthusiasm for Ryan’s plan.

In principle the country’s elite should be lying low right now. After all, their greed and ineptitude has given us the worst economic collapse since the Great Depression. But after getting the Wall Street banks back on their feet with trillions of dollars of government-subsidized loans, the elite are once again making a full-frontal assault on the living standards of the middle-class.

Last week it was Medicare. Next it will be Social Security.

The ostensible rationale for this attack is the country’s huge budget deficit. Nonsense. As every pundit knows (or should know), the country has a huge deficit today because the Wall Street boys drove the economy off a cliff. And if the government deficit wasn’t propping up the economy, we’d be looking at 11 or 12 percent unemployment nationwide rather than 8.8 percent. Spending creates jobs, and at this point it’s not coming from private sector, so the government must fill the hole.

Over the longer term the projections of huge deficits are driven by the projected explosion in health care costs. President Obama’s health care reform took steps toward constraining these costs, although probably not enough. Remarkably, Ryan’s plan abandons these cost-control measures, virtually guaranteeing that quality health care becomes unaffordable for all but the very affluent.

And the pundits call Ryan’s plan “serious.” Well, yes, in a way it is. It’s a serious plan for taking tens of trillions of dollars from low-income and middle-income people and giving them away as tax breaks to the rich and to the health care industry. It is as serious as a robber with a gun pointed at your head.

— adapted from an April 11 ‘Huffington Post’ blog entry by Dean Baker, Co-Director of the Center for Economic and Policy Research, Washington, D.C.



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