September 1, 2011
by Tevi Troy
If you wonder what the central issue of the 2012 election will be, Nancy Pelosi has a three-word proposal: "Medicare, Medicare, Medicare." In a front-page profile in the Washington Post, the former Speaker of the House stated that the health-insurance program for the elderly will occupy all three slots in her list of the top three priorities. For those who care about the health of America's seniors and the fiscal health of the nation, this is not good news.
Recent statements and actions by Pelosi and other Democrats reveal that the Democratic Party believes that making political use of Medicare is more important than ensuring the viability of the program itself. Recent history shows that the hunger to be simultaneously on offense and defense—fighting aggressively against efforts at reforming Medicare in order to save it—may well succeed in undermining any prospects for meaningful reform and further poison the relations between the two parties.
The eagerness to exploit the politics of Medicare is already influencing the Democratic party's approach to policy. The Washington Post recently reported that Senator Patty Murray, chairwoman of the Democratic Senatorial Campaign Committee (DSCC) -and newly appointed Democratic co-chair of the deficit reduction super committee, is working behind the scenes to stop any Democratic compromise or effort to reform Medicare. A source close to Murray described her political rationale: "We shouldn't be giving away our advantage on Medicare….We should be very careful about giving away the biggest advantage we've had as Democrats in some time."
For Murray and other Democrats, the Medicare "advantage" means rekindling the politics of the 1990s, when Democrats in Congress teamed up with a Democratic president to turn a Republican attempt to reform Medicare from an honest debate into a decisive victory against conservatives in 1995. This "advantage," as Murray sees it, means ignoring the Medicare trustees who have warned that the long-term liability of Medicare is in the neighborhood of $30 trillion. It also means ignoring the lessons of Greece, Portugal, and Italy, whose unsustainable entitlement programs are sending shockwaves throughout the international monetary system.
Democrats have good reason to see Medicare-based attacks as a path to electoral success. Looking at the history of such attacks over the last 30 years reveals a landscape littered with the bodies of those who got on the wrong side of what the late columnist William Safire? dubbed "Mediscare." He defined it, back in 1995, as a "shamelessly demagogic campaign to frighten older Americans into thinking that deficit reduction might soon leave them destitute in the snow, and to bamboozle them with pie in the medical sky." This sorry conduct also explains why and how Medicare ended up as a program in crisis that could sink the nation's economy.
Safire coined the term to describe Bill Clinton?'s attacks on Newt Gingrich?'s Congress, but the use of the tactic goes back further, to Jimmy Carter? and the 1980 election. Carter charged that, in the 1960s, Ronald Reagan? opposed the creation of Medicare and that as president he would therefore be a poor steward of the program. This line of attack was responsible for one of the great unforced errors in American political history. As Jim Lehrer describes in his new book about presidential debates,* the sole 1980 presidential debate came to a head on "a proposal concerning Medicare and Carter's repeated charge that Reagan had opposed even its original creation on the grounds that it was socialized medicine." On the subject, Carter said, "Governor Reagan again, typically, is against such a proposal." Reagan's response began with four words that devastated Carter's chances of reelection: "There you go again."
Carter, in an interview with Lehrer years later, was bitter about the way things played out. "That was a memorable line," the former president said. "I think that it showed he was relaxed and had a sense of humor, and it was kind of a denigrating thing for me. And I think that he benefited from saying that, politically speaking." Carter's sorrowful tone applies to the fact that the interaction benefited Reagan "politically speaking," and not to any regrets that Carter had attempted to make dishonest use of Medicare.
The brilliant viciousness of Mediscare is that it implicitly accuses your opponents of moral turpitude, selfishness, and hatred of the elderly. Reagan's response, which combined exasperation with mannerly disagreement, dismantled the accusation because he did not have the mien of a man intending to harm old people—after all, he was 69 when he spoke those words, which meant Reagan was one of them. He followed his riposte with a simple statement that he had at the time favored alternative legislation that would have been more fiscally responsible. And, indeed, it would have been.
In 1980, Medicare was only in its adolescence, having been signed into law in 1965, and the extent of the fiscal challenges it would create were not yet apparent. For this reason, attacks against Republicans on the Medicare issue were relatively mild throughout the 1980s (although the left achieved some of the same effect by highlighting homelessness). By the 1990s, however, things had changed, as the program that was originally projected to cost only $12 billion in 1990 had already surpassed $100 billion in spending annually. As Avik Roy explained in National Affairs, "Medicare expenditures grew at roughly 2.4 times the rate of inflation" in the period from 1975 to 1990—a period that was not unfamiliar with inflation.
By the time the Republicans took control of the House and the Senate in 1994, Medicare had become a significant part of the federal spending—today, Medicare and Medicaid constitute a staggering 23 percent of the federal budget. No effort to control budget deficits could then or can now be taken seriously without taking Medicare into serious consideration. In the aftermath of their electoral triumph, the Gingrich Republicans saw an issue that had to be addressed, and they sought to put controls on the growth of Medicare spending. And in this, Democrats saw an opportunity to regain lost political ground.
According to Gingrich, who endured the brunt of the attack in the 1995–1996 Mediscare wave, the Democrats "attacked Republicans in thousands of ads" on the issue. The nature of the attacks will sound familiar to those following the current debate. Bill Clinton claimed, in an oft-repeated phrase, that Republicans wanted to let Medicare "wither on the vine." This was a mischaracterization of Gingrich's comment that his vision of seniors choosing private health coverage would cause the unpopular and intrusive Medicare bureaucracy to "wither on the vine."
Clinton's comments were not the only distortion. Far from it. Clinton press secretary Mike McCurry foreshadowed the rhetorical excesses of the one-term Florida Representative Alan Grayson in 2009 when he argued on October 26, 1995, that "the reason they're trying to slow the rate of increase in the program, I suppose, is because eventually they'd like to see the program just die and go away. You know, that's probably what they'd like to see happen to seniors, too, if you think about it."
Even the pre–Fox News White House press corps thought this was a bit much. The official transcript from the briefing at the Clinton Library records the press reaction to this statement as "Q: Ooooooooh!" McCurry, chastened somewhat by the "Ooooooooh!," backtracked only slightly, saying, "What they want to do is move this very important program that is a life line for many elderly, which provides them necessary resources to get medical attention. And they want to shift things over to private-sector arrangement in the belief that people will fend for themselves better than if they have [a] helping hand from government."
The standard narrative about the episode is that the Mediscare campaign, along with the showdown over the government shutdown, stopped the momentum of the Republican Revolution and helped get Clinton reelected in 1996. This in turn diminished the threat of Gingrich and his ideas, and after Gingrich was deposed as speaker after the 1998 election, the Republican Congress became more wary of taking on Medicare and other third-rail political issues. Gingrich tells the tale slightly differently. Writing in Human Events, the former speaker argued, "In 1996, the House Republicans were vindicated when we became the first reelected House Republican majority since 1928. All those lies about Medicare led to public disgust with the Democrats, and they did not regain power until the Republicans had held the House for twelve years."
Perhaps Gingrich is right in his analysis, but certainly Republicans acted in the elections that followed 1996 as though they would do almost anything to avoid another Mediscare assault. So it is no surprise that Mediscare is once again the approach Democrats plan to pursue for 2012, and that the Republican Party is worried. One GOP lobbyist and former Bush White House? official recently told a group of GOP Capitol Hill? staffers that it was "fun being on offense, but now you're on defense." Many Republicans share the feeling. While the 2009 and 2010 battles over Obama's health-care law provide evidence that Republicans can push back and win on the health-care issue, conventional wisdom and most current GOP thinking both argue that the GOP cannot win on the narrower issue of Medicare.
The reaction to Representative Paul Ryan's honest proposal to reform Medicare has served only to solidify that fear. In April, Ryan proposed a "premium support" plan to restructure Medicare to make it fiscally sustainable. He has long been regarded as the most thoughtful and articulate Republican on budget issues, and the plan he created is far from a radical one. As Politico observed, Ryan's plan was a "proposal he developed with former Office of Management and Budget Director Alice Rivlin," who served in that position in the Clinton administration and remains a Democratic grand dame on budgetary issues. Rivlin's participation in the plan's genesis should signal that the plan (which she has not endorsed) is not nearly as frightening as either Democrats or the media are making it out to be.
The basic outline of the Ryan plan is as follows. Future, not current, retirees will get a list of guaranteed coverage options for Medicare provided by private-sector insurance companies. They will also get some level of federal support for the premiums they must pay into the plan they choose. The support would be means-tested, so wealthier individuals would receive less support than would lower-income individuals. Medicare would also provide additional assistance to both lower-income recipients and beneficiaries with greater health risks.
This innovation—linking support to both economic and health needs—would correct a serious flaw in the current structure of Medicare. Right now, seniors currently are promised, and receive, Medicare hospital benefits regardless of income level. This means that Medicare's Part A does not distinguish between Warren Buffett? and an impoverished widow. As a result, Medicare currently spends billions of dollars on seniors who do not need governmental assistance to pay for their medical bills. This is done largely to maintain the illusion that Medicare is an insurance policy on which people are collecting and not an income transfer from younger taxpayers to the elderly. Shattering this illusion is one of the most politically explosive aspects of the Ryan plan.
There are other advantages to the Ryan plan as well. Providing a fixed level of premium support to each senior would make federal health-care spending a predictable expenditure—thus ending the unknowable spiral of cost increases Medicare now presents. In addition, it will follow in the footsteps of the 2003 Medicare Part D prescription drug program by encouraging competition, which has held costs for Part D under projected levels and has proved extremely popular with its participants. Third, the plan will get the government out of the business of picking and choosing medical services, or of rationing care. Under the plan, the government would pay for premiums, but the coverage decisions would be made by plans chosen by seniors, and seniors could choose to switch plans if those decisions were not to their liking.
The Mediscare playbook was so obvious that the critics on the right were writing the Post and Times stories before the Democratic machinery even got started. While reviewing the Ryan plan for National Review Online, the Manhattan Institute's Paul Howard predicted that it would be greeted with "howls of outrage on Capitol Hill." He was right—and those howls have echoed throughout the media.
Even the Democratic Party's more august members succumbed to the temptation to exploit the politics of Medicare. Princeton professor Alan Blinder?, a former economic advisor for President Clinton?, went on the offensive in the Wall Street Journal, accusing Ryan of creating a "Reverse Robin Hood Budget." If academics feel free to begin the discussion so stridently, why should party hacks show the slightest restraint? And they didn't. After Texas Republican Representative Francisco Canseco voted for the Ryan Budget, the Democratic Congressional Campaign Committee aired a radio ad that asked listeners, "Did you know Congressman Francisco Canseco voted to end Medicare, forcing seniors to pay $12,500 for private insurance, without guaranteed coverage? Tell Canseco to keep his hands off our Medicare." Another ad featured a senior citizen moonlighting as a stripper at a bachelorette party in order to pay for his health-care costs after Republicans "end Medicare."
Off-the-cuff remarks from Democratic operatives have been as laden with absurd metaphors as the scripted attacks. A party spokesman named Matt Canter fired off this salvo at some of Ohio's top Republican politicians: "Mandel, Coughlin, and Blackwell's party bosses are playing chicken with Ohio's economy solely to advance their extreme plan to end Medicare." He used exactly the same metaphor in Nevada: "Dean Heller?'s party bosses are playing chicken with Nevada's economy solely to advance their extreme plan to end Medicare." Another party spokesman, Jesse Ferguson, said, "House Republican leaders are now full speed ahead on a partisan plan that would dismantle Medicare for seniors."
The plan does nothing of the sort—everyone currently receiving Medicare will continue to receive it, as will everyone who is now 10 years away from retirement age. No matter. Democrats believe that this line of assault will put them back in power, and they offer as evidence Democrat Kathy Hochul's victory in a special election to replace New York Republican House member Mike Lee. Despite the fact that a liberal activist ran as a tea-party candidate in the race, splitting the Republican vote in the largely Republican district, Washington journalists and pundits attributed the Democratic victory to an aggressive use of the Medicare issue.
Although this history gives Democrats cause for optimism, Republicans may have a chance at fighting back against a Mediscare campaign because of the Democrats' own actions on the issue. Obama's health-care law included cost-cutting measures of its own, such as the creation of the Independent Payment Advisory Board (IPAB) and Comparative Effective Research (CER). Both of these represent attempts to manage the practice of medicine in the United States from the top down, in a manner that might cut costs but in a spectacularly heavy-handed way, by denying people life-extending treatments. And from a fiscal perspective, the Obama health-care law seeks to save Medicare money through these tactics only in order to put it toward other extensions of public health-care spending.
Furthermore, in the past, the no-change brigade has had an unbeatable edge in the Mediscare wars. Today, however, there is mounting and frightening evidence that buried heads in the sand cannot solve the enormous fiscal problems Medicare faces. In fact, over the past two years, we have seen an increasing although insufficient recognition on the part of the American people that Medicare shortfalls are creating an undeniable threat to our nation's fiscal well-being. The deficit for just this one program—$39 billion this year alone—is greater than the entire $35 billion deficit of Greece. Greece's national insolvency is minuscule when compared with the colossus of Medicare dysfunction. Medicare trustees have warned of the $30 trillion long-term liability: "If Congress continues to override the statutory decreases in physician fees, and if the reduced price increases for other health services under Medicare become unworkable and do not take effect in the long range, [this] would substantially increase the strain on the nation's workers, the economy, Medicare beneficiaries, and the Federal Budget."
Even President Obama, quarterback of the Mediscare effort, has acknowledged the enormity of our fiscal problem, saying, "If you look at the numbers, then Medicare in particular will run out of money, and we will not be able to sustain that program no matter how much taxes go up." He added, "I mean, it's not an option for us to just sit by and do nothing." Obama's chief of staff, William Daley, said on ABC's This Week that "Medicare's got to be strengthened. It will run out of money in five years if we don't do something."
Obama and his economic lieutenants may make this point, but they have failed to propose reform alternatives, knowing that it is far easier to knock down the proposals of the other side than to offer serious but politically risky reforms of their own. To be fair, this was the Republican strategy in opposing Obama's health-care law. But at the time, Republicans had no control of any of the levers of power and made their case in opposition as a minority party. Obama, in contrast, is trying to have it both ways, posing as the nation's responsible fiscal steward, while at the same time leading a campaign predicated on both opposing serious reform and refusing to offer alternative approaches.
And so, even as the administration's leaders acknowledge the absolutely desperate state of Medicare's finances—while refusing to suggest ways to solve the problem—their minions are steadily on the political attack on behalf of this misleading and unattainable notion of "saving Medicare as we know it." The next election will test Republican resolve to get the country on a more responsible track, and test the basic honesty of Democratic leaders when they are called to account for the fiscal disasters that lie in wait if Medicare is not reformed. And the American people will be tested as well. Will they be able to see through the fog of Mediscare to the very simple fact that a program designed with the best of intentions could have the most catastrophic of results—the fiscal collapse of the country itself?
Tevi Troy is a Senior Fellow at Hudson Institute and served as the Deputy Secretary of the U.S. Department of Health and Human Services from 2007 until 2009.
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