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Medicare Jujitsu

How Romney and Ryan are turning the Democrats’ favorite campaign attack against Obama

Aug 27, 2012, Vol. 17, No. 46 • By YUVAL LEVIN
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In the wake of Mitt Romney’s selection of Paul Ryan as his running mate, conservatives and liberals seemed almost equally happy. To the right, the pick represented a bold decision to make a forthright case against President Obama’s vision for the country and to champion solutions to the problems that the president has only made worse. Romney had put his party’s best policy thinker and one of its best communicators on his ticket and was raring to make his case to voters. To the left, it seemed like a sop to conservatives that would force Romney to defend a policy vision the public would not buy. Romney had put his party’s most controversial budget cutter on his ticket and ran the risk of being tagged with Ryan’s parsimony.

Just whose hands are you talking about?

Just whose hands are you talking about?

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They cannot both be right. But they do both think they are right, and look likely to act on that conviction. That very fact will tend to counteract the chief weakness of the Romney campaign thus far and to reinforce the chief weakness of the Obama campaign.

Romney now looks set to run a campaign built around a stark and specific critique of Obama’s economic failures hitched to a relatively vague but distinctly conservative alternative vision focused on enabling growth in the near term and reforming entitlements in the long term. Obama looks set to run a campaign built around a highly detailed critique of a few conservative ideas (not all of which his opponent has actually championed) and a slash-and-burn offensive against Romney and Ryan as individuals.

If the first week of the Romney-Ryan ticket was any indication, this is not going to work very well for the Democrats. The Ryan pick, and the ensuing liberal glee, almost immediately set off a debate about Medicare for which it soon became apparent that the Democrats were woefully unprepared.

Medicare has been a favorite issue of the left for decades. As the program’s spending has ballooned out of control, Democrats have used every Republican attempt to rein it in as an opportunity to paint the GOP as the enemy of the elderly​—​telling seniors that their benefits were threatened, and scaring Republicans away from reforms. But Democrats have grown so comfortable with Medicare demagoguery that they have neglected to actually keep themselves on the safe side of the issue. And in their desperate effort to mask the immense cost of Obamacare in 2010, they took more than half a trillion dollars out of Medicare over the coming decade to pay for their new health entitlement for younger Americans.

Republicans, with Ryan first among them, saw in this an opportunity to transform the Medicare debate, and starting with the FY 2012 House budget proposal in the spring of 2011, they have pursued a course that would leave all current seniors and near-retirees untouched while transforming Medicare for younger Americans into a premium-support system that would reduce costs through intense competition among insurers.

The reactions to Ryan’s first Medicare proposal, and the course of a few subsequent special elections for House seats, gave Republicans an opportunity to hone their idea and their case for it in ways that mostly went unnoticed by the Democrats.

The only liberal charge against the plan that seemed to stick was that the premium-support benefit might not grow quickly enough to keep up with premium costs, potentially shifting costs to seniors. So proponents of premium support tweaked the idea to enable the benefit to be determined through an annual competitive bidding process among insurers, so that it would automatically keep up with premium costs. If competition succeeded in lowering costs, the government’s budget outlook would improve, if not then it would not, but either way future seniors would be guaranteed a comprehensive benefit at no greater out-of-pocket costs than those incurred today. 

Mitt Romney was actually the first to propose a version of this reform, in the course of the primary campaign, and a few weeks later Paul Ryan offered an essentially identical proposal together with Democratic senator Ron Wyden of Oregon​—​a liberal who has always been open to pro-market health reforms. That Ryan-Wyden proposal, slightly tweaked, was also in the FY 2013 Republican budget passed this spring by the House.

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