The ACP Advocate Blog
by Bob Doherty
Wednesday, March 21, 2012
Dissecting the Ryan Budget
Try your hand at today’s multiple choice quiz about the budget blueprint released yesterday by Rep. Paul Ryan (R-WI), House Budget Committee chair. The plan:
1. Dramatically reduces the public debt over the next decade.
2. Relies on unrealistic and vague assumptions.
3. Drastically reduces health spending on the poor.
4. All of the above.
The answer is all of the above—even though the first two statements seem to contradict each other. How can they both be true? Well, the Congressional Budget Office says this about the Ryan budget:
“At the end of fiscal year 2011, federal debt held by the public was 68 percent of GDP. The paths for revenues and spending specified by Chairman Ryan and his staff would lead to debt equal to 61 percent of GDP in 2023, 53 percent in 2030, and 10 percent in 2050. That debt would be a much smaller share of GDP . . .”
But here is the kicker: the CBO was relying on the “paths for revenues and spending specified by Chairman Ryan and his staff” in coming up with these estimates—that is, it is taking their word that Congress will come up with the required revenue and spending cuts, and that the policies proposed in the document will work as Rep. Ryan says they will. Or, as CBO itself puts it, “Those calculations do not represent a cost estimate for legislation or an analysis of the effects of any given policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures released today by Chairman Ryan as part of his proposed budget resolution.”
And, as the Washington Post points out in its editorial today, the Ryan budget is “intentionally vague” on how it would achieve the revenue and savings numbers that the CBO was working from:
“THERE IS NO credible path to deficit reduction without a combination of spending cuts and revenue increases. This is the fundamental conclusion of every responsible group that has examined the issue, most prominently the Simpson-Bowles commission, and it is the fundamental failure of the budget blueprint released Tuesday by House Budget Committee Chairman Paul Ryan (R-Wis.). Instead, and unfortunately, Mr. Ryan’s plan lunges in the opposite direction. He dangles the carrots of lower income and corporate tax rates. He says he would maintain tax revenue and in fact have it grow to 19 percent of the gross domestic product by 2025. Yet he fails to do the hard, and politically treacherous, work of specifying what deductions and credits he would eliminate in order to make all that happen. Does Mr. Ryan propose to eliminate the mortgage interest deduction? The preferential tax treatment of employer-sponsored health insurance? The deduction for charitable donations? Mr. Ryan says he’d leave those pesky details to the tax-writing House Ways and Means Committee, and no wonder: The nonpartisan Tax Policy Center said Mr. Ryan’s plan would reduce revenues by an eye-popping $4.6 trilllion — and that’s on top of the $5.4 trillion cost of making the Bush tax cuts permanent.”
What is much clearer is that the Ryan budget would cut so much out of Medicaid (the program that funds medical care for most of the poor) that it would result in millions more uninsured and underinsured poor Americans, according to an analysis by the Center for Budget and Policy Priorities. (The CBO agrees: “the magnitude of the reduction in spending . . . means that states would need to increase their spending [on Medicaid and the Children’s Health Insurance Program], . . . make considerable cutbacks in them, or both. Cutbacks might involve reduced eligibility, . . . coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries — all of which would reduce access to care.”)
The Washington Post’s Ezra Klein observes that the reduction in spending on the poor isn’t due to any intent on Rep. Ryan’s part to hurt the poor, but because the GOP’s “overlapping fiscal commitments . . . leave them few other choices”:
“I don't think Paul Ryan intended to write a budget that concentrated its cuts on the poorest Americans. But there's a reason their budgets turned out so similar: The Republican Party has settled on four overlapping fiscal commitments that leave them with few other choices. The Republican plans we've seen share a few basic premises. First, taxes are too high, and must be cut. Second, defense spending is too low, and should be raised. Third, major changes to entitlement programs should be passed now, but they shouldn't affect the current generation of retirees. That would all be fine, except for the fourth premise, which is that short-term deficits are a serious threat to the country and they need to be swiftly cut. The first three budget premises means that taxes and defense will contribute more to the deficit, and Medicare and Social Security aren't available for quick savings. That leaves programs for the poor as the only major programs available to bear cuts. But now cuts to those programs have to pay for the deficit reduction, the increased defense spending, and the tax cuts. That means the cuts to those programs have to be really, really, really deep. The authors have no other choice.”
The Ryan budget also includes a new version of last year’s Medicare premium support program, but this time, he would allow beneficiaries the option of enrolling in a public Medicare program in addition to the choice of using the government’s allowed contribution to buy private insurance. Under either option, most seniors would pay more for their care, because the government’s allowance would not likely keep pace with the costs of medical care.
Rep. Ryan deserves credit for laying out the fiscal choices facing the country (but not for his vagueness in how he would achieve the revenue and savings estimates). On that score, he has done much more to focus the debate on how to reduce the debt and the choices involved than President Obama and Senate Democrats, who have been quick to criticize while failing to offer their own detailed plans.
But physicians especially should be concerned about the impact of the Ryan budget on health care for the poorest Americans. The American College of Physicians has long advocated that every American, regardless of where they live or work or how much they earn, should have access to affordable health coverage. The Ryan plan, regrettably, violates this concept by taking health care away from those who can least afford it. There are better ways to reduce the public debt than going after health care for the most vulnerable.
Today’s question: What is your reaction to the Ryan budget?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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