2011-05-06 / Columnists

The Rockaway Irregular

Budget Reform Or Fiscal Ruin?
Commentary by Stuart W. Mirsky

Writing in this paper a couple of weeks back, Wave editor Howie Schwach made the case against the Ryan budget (recently passed in the House as a resolution but still not acted upon in the Senate). Echoing our local Congressman Anthony Weiner’s oft expressed mantra that we should be very much “afraid” of Wisconsin Congressman Paul Ryan’s plans to cut the growth of government spending, beginning in 2012, Howie zeroed in on the proposed cuts to Medicare. A threat to seniors’ benefits, he said because they are likely to increase costs, both for the seniors and everyone overall. Medical costs, as most of us now know, have been rising at an astronomical rate and the Ryan budget aims to address this problem, among others.

It proposes changes that will affectAmericans under 55 years old today while leaving currently eligible and near eligible Medicare participants unaffected. It does this by converting the current government payment system (which many doctors are increasingly refusing to participate in because of limits on payments) into a “premium support” system which replaces direct government coverage for new recipients in the future with a stipend to pay for health insurance obtained privately. This is done on a decreasing scale so lower income seniors will receive larger stipends which decrease as incomes rise. Critics like our editor contend that this, along with Ryan’s proposed block granting of Medicaid (medical coverage for the indigent) to the states will leave future seniors undercovered because of the steady rise in health care costs.

“Ryan needs to cut Medicare and Medicaid,” Howie writes, “because he needs the money to fund massive tax cuts for the rich . . .” It’s a complaint that has long formed part of the traditional litany of the left, reflecting a fundamental divergence in viewpoints between the two main policy antagonists in the nation today: those who want bigger government to do more and more and those who want government to live within its means. For folks like Howie, it’s about what should be given to us by the government. For those on the other side of the debate it’s about what government can afford to do and what operating beyond its means must inevitably do to this nation.

Let’s be clear. No one of good will on either side of this debate wants to see others suffer. The argument is not about throwing the needy to the wolves but about how to achieve the best outcomes for the nation. “Medicare,” as former New York State Lieutenant Governor and renowned healthcare expert Betsy McCaughey recently wrote in the Wall Street Journal, “as we’ve always known it is already gone. It was eviscerated by President Obama’s health law.”

Not even the president or his Congressional allies dispute the fact that Medicare at its current rate of growth is unsustainable. That’s a big part of why they told us they were pushing for the reform known as Obamacare. That new law, says McCaughey, “reduces future funding for Medicare by $575 billion over the next 10 years and spends the money on other programs, including a vast expansion of Medicaid.” This might be justifiable, she writes, “if the savings extended the financial life of Medicare.” But, in fact, she reminds us, the law actually “raids Medicare” to pay for those it makes newly eligible for Medicaid.

So Medicare as we knew it is already gone under the current law, nor was it sustainable before as most everyone agreed. The president’s solution is to use a panel of experts to make cuts to services deemed reimbursable in the future and further reduce payments for medical providers. But this will reduce benefits for future Medicare patients while driving more medical professionals from the field, thus adversely impacting the quality of care available.

Given the out-of-control growth of costs, the Ryan plan offers a different solution. By providing insurance premium stipends to future seniors, on a sliding scale, those most in need will still get coverage while customer choice and competition between insurance companies and among service providers will be reintroduced into the system. Many on the left (perhaps most) reject this notion of private initiative and choice but that’s what’s always made things work in this country. Why mess with a good thing?

When there’s choice there’s competition and, when there’s competition, providers know they need to charge less while delivering more bang for the buck in order to get and keep customers. Medical consumers are customers, after all, like everyone else – and medical professionals have a service to sell. It’s the simple rule of supply and demand.

It may seem grimy and crass to many idealists to think that it all boils down to money – who’s got it and who wants it – but that’s how things work in the real world. The current system, in which government simply pays for Medicare recipients’ coverage feels like it’s free to Medicare patients (though it’s not because we all pay in taxes and interest on the national debt). Because it seems to be a “free” service, though, it fails to incentivize patients to shop around for the best deals. Thus it encourages the unsustainable growth of medical care that’s contributing to our current rush toward national bankruptcy.

Editor Schwach ends his article by slamming Republicans who are trying to bring costs down by invoking the old stand-by specter of class warfare, us against them. He suggests voters will reject budget conscious Republicans when they see their once sacrosanct Medicare program imperiled. “Republicans,” he adds, “might say . . . seniors are taking the easy road by demanding entitlements that are hurting the nation at large as well as future generations, but it is the seniors who built this nation, and the rich businesspeople and Wall Street interests who have destroyed it.”

It’s a false dichotomy because we’re all in the same national boat together and a nation sinking in its own debt takes everyone down with it – from captain to the lowliest cabin boy.

We can’t solve this by adding yet more spending and higher taxes as Obama- care does, because history teaches you can never, ever tax enough.

Government officials and bureaucrats have an insatiable appetite for funds. Left to their own devices and believing in the power of the blank check, the government will always give us new programs, new entitlements, and new boondoggle to suck up any excess funds, leaving us in need of still more borrowing and still more taxes even as excessive borrowing drives down the value of our money and scares investors and lenders from our shores. This is costing us economically now and will do so for years to come if it’s not brought under control quickly. But you have to look beyond individual interests to see it. If your eyes are only on what you can expect to get for “free” you don’t see the issue of long-term implications and costs.

If something isn’t done now to get government spending under control, starting with programs like Medicare, there’ll be nothing left as we sink inexorably into third world status and other nations surge ahead to leave us in their dust. “Which group is entitled to some consideration?” our editor ends by asking, seniors or “the rich.” A better question might be: “What will be left to consider at all, once the American ship has finally gone down beneath the heavy seas of its own fiscal imprudence and uncontrolled deficits?”

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