Rein­ing in Med­i­caid

The Washington Post Sunday - - SUN­DAY OPIN­ION - GE­ORGE F. WILL georgewill@wash­

Were it not for the pro­vi­sion that Pa­trick J. Toomey, the Penn­syl­va­nia Re­pub­li­can, put into the Se­nate’s pro­posed health-care re­form, this leg­is­la­tion would be mod­er­ately im­por­tant but hardly mo­men­tous. Toomey’s pro­vi­sion, how­ever, makes it this cen­tury’s most sig­nif­i­cant do­mes­tic pol­icy re­form.

It re­quired tenac­ity by Toomey to in­sert into the bill a grad­u­ally ar­riv­ing, but mean­ing­ful, cap on the rate of growth of per-ben­e­fi­ciary Med­i­caid spend­ing. It is re­quir­ing of Toomey and kin­dred spir­its stren­u­ous ef­forts to keep it there, which re­veals the Re­pub­li­can Party’s itch to slouch away from its un­com­fort­able but in­dis­pens­able role as cus­to­dian of re­al­ism about arith­metic.

Toomey notes that in ev­ery decade since Med­i­caid be­gan in 1965, it has grown faster than the econ­omy, and than al­most ev­ery other pro­gram, none of which matched Med­i­caid as a driver of the deficit. In Med­i­caid’s life, its ex­pen­di­tures have grown more than twice as fast as nom­i­nal (un­ad­justed for in­fla­tion) gross do­mes­tic prod­uct. And although the fed­eral gov­ern­ment pays for most of Med­i­caid, states pay some, and since 1990 the por­tion of states’ bud­gets de­voted to it has risen from 9.5 to 19.7 per­cent — al­most one in five dol­lars.

Lawrence Lind­sey, for­merly a gov­er­nor of the Fed­eral Re­serve Sys­tem and an as­sis­tant to both Pres­i­dents Ge­orge Bush, puts the mat­ter plainly: “No large com­po­nent of the fed­eral bud­get can per­pet­u­ally grow faster than nom­i­nal GDP.” In 1970, Med­i­caid spend­ing was 1.4 per­cent of fed­eral spend­ing. In 1980, it was 2.4 per­cent. In 1990, 3.3 per­cent. By 2000, it had dou­bled to 6.6 per­cent. In 2010, it was 7.9 per­cent. In 2017, it will be 9.8 per­cent.

To­day, Med­i­caid, an open-ended en­ti­tle­ment, is one rea­son ap­prox­i­mately 50 per­cent of Amer­ica’s $3.4 tril­lion an­nual health-care bill is gen­er­ated by 5 per­cent of the pop­u­la­tion: These “plat­inum pa­tients” in­clude some in long-term care largely funded by Med­i­caid. In the Se­nate draft, for eight years the growth of Med­i­caid spend­ing would equal in­fla­tion in the health-care sec­tor (some­what more spend­ing for the el­derly and dis­abled). Af­ter eight years, Toomey’s mea­sure would lower the growth rate of per-ben­e­fi­ciary spend­ing to meet the nor­mal mea­sure of in­fla­tion — the ba­sic con­sumer price in­dex.

In 1995, all 46 Demo­cratic sen­a­tors ex­pressed to Pres­i­dent Bill Clin­ton “strong sup­port for the Med­i­caid per­capita cap struc­ture.” Three of those 46 are still sen­a­tors — Ver­mont’s Pa­trick J. Leahy, Cal­i­for­nia’s Dianne Fe­in­stein and Wash­ing­ton’s Patty Mur­ray. What about Med­i­caid’s tra­jec­tory since then has changed to jus­tify them chang­ing their minds?

When a mil­i­tary in­ter­ven­tion ex­pands be­yond its orig­i­nal ob­jec­tive, this is called “mis­sion creep.” Do­mes­ti­cally, Med­i­caid demon­strates “mis­sion gal­lop.” In 1965, it was merely med­i­cal in­surance for poor peo­ple el­i­gi­ble for cash as­sis­tance. Now it cov­ers, in var­i­ous states, many co­horts at or near the fed­eral poverty level — se­niors, peo­ple with dis­abil­i­ties, fam­i­lies with young chil­dren and preg­nant women, able-bod­ied child­less adults, and peo­ple with­out ad­e­quate re­sources for long-term res­i­den­tial care. Says Lind­sey: “In re­cent years, in al­most half of the United States, a ma­jor­ity of the ba­bies born had their de­liv­er­ies fi­nanced by Med­i­caid.”

In 1983, re­forms that ex­tended So­cial Se­cu­rity’s sol­vency for ap­prox­i­mately 50 years in­cluded in­creas­ing the age of el­i­gi­bil­ity for So­cial Se­cu­rity, in tiny in­cre­ments, from 65 to 67 — in 2027. Be­cause of Med­i­caid’s ac­cel­er­at­ing growth, and its im­pact on the states, Toomey’s brisker eight-year phase-in is pru­dent.

On June 29, with the health-care de­bate rag­ing, the Con­gres­sional Bud­get Of­fice re­vised $134 bil­lion up­ward, to $693 bil­lion, its pro­jec­tion for the 2017 bud­get deficit. And it raised by $686 bil­lion its pro­jec­tion of cu­mu­la­tive deficits over the next decade. The main rea­son for the re­vi­sions is the CBO’s ex­pec­ta­tion of in­ter­est-rate in­creases by the Fed­eral Re­serve. These will raise the cost of ser­vic­ing the na­tional debt, which it­self is be­com­ing a ma­jor driver of its own ex­pan­sion. Med­i­caid, how­ever, is another im­por­tant driver.

As Lind­sey says, Med­i­caid’s un­re­strained growth will be­come eco­nom­i­cally im­pos­si­ble, then arith­meti­cally im­pos­si­ble. Democrats fancy them­selves the “party of sci­ence” — strangely, be­cause they think cli­mate sci­ence (un­like as­tro­physics, neu­ro­bi­ol­ogy or any other sci­en­tific field) is “set­tled.” Democrats cer­tainly are not the party of arith­metic. Re­pub­li­cans can fill that com­par­a­tively mun­dane but use­ful role by en­act­ing Toomey’s pro­vi­sion, which is, as Lind­sey says, “the first se­ri­ous at­tempt to limit the un­sus­tain­able rise in en­ti­tle­ment spend­ing in our life­time.” Ei­ther by pre­serv­ing or by re­ject­ing Toomey’s mea­sure, con­gres­sional Re­pub­li­cans will an­swer an in­creas­ingly per­ti­nent ques­tion: Is the Re­pub­li­can Party nec­es­sary?

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