THERE'S NOTHING LESS RADICAL THESE DAYS THAN THE THIRD WAY:

Rep. Ryan proposes radical solution to budget problem (Ezra Klein, 2/07/10, Washington Post)

[Rep. Paul D.] Ryan's budget is a radical document that takes current policy and rolls a live grenade underneath it. Social Security? Ryan's adds private accounts. Medicaid? Ryan privatizes it. Medicare? Same thing. Health care? Ryan repeals the subsidy for employer-provided insurance, replacing it with a tax credit.

The boyish Ryan is a conservative darling and the ranking Republican on the House Budget Committee, but there's nothing conservative about this document. It does not respect, much less preserve, the status quo. But then, that's a point in Ryan's favor. The status quo does not deserve our respect. It is unsustainable. Left unchecked, it will bankrupt our country. On that, Ryan's radicalism is welcome, and all too rare. The size of his proposal is shocking, but it is proportionate to the size of our problem: According to the Congressional Budget Office, which examined a simplified version of his proposal, it would wipe out our projected long-term deficits.

Facing up to how he does this is a worthwhile exercise in understanding our budget problem. It's not the privatization that does it. His proposal to add optional private accounts to Social Security actually increases the program's cost, which is a good reminder that Social Security plays little role in our long-term deficits. Similarly, his proposal to privatize Medicare increases costs. As the CBO points out, Medicare negotiates lower prices than private providers and is run more efficiently. "Beneficiaries would therefore face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare," the wonks conclude.

Ryan saves his money after he privatizes the programs. Under his proposal, seniors stop getting Medicare, which is both government-run and pays for any procedures that can be shown to help improve their condition. Instead, the seniors get a voucher to buy private insurance, and that voucher grows more slowly than medical costs. That means the coverage that voucher buys is going to grow more slowly than medical costs. Seniors will be in the same position the rest of us are in: Either you can afford the coverage and care you need through savings or subsidies or both, or . . . you can't.

That, at least, is what the CBO is scoring. Ryan's hopes are different. "You compartmentalize the programs," he tells me. "Don't do that." In his telling, his proposal unleashes market forces by pulling people out of Medicare, out of Medicaid and out of the employer-based market. He envisions insurance exchanges and better information on quality and cost. Combine that many consumers with that much money and that much transparency, and it'll have to reform itself into something we can afford. "This sector isn't immune from free-market principles," he says.

The notion that procedures improve conditions is comical.

Posted by Orrin Judd at February 7, 2010 8:38 PM