Medicare reform a good Rx

The Arizona Republic
Tuesday, November 15, 2011
Robert Robb

From the political notebook:

Mitt Romney recently stepped more bravely into the entitlement-reform minefield. He basically endorsed Congressman Paul Ryan's plan to transform Medicare from a program that pays for the medical bills of seniors to one that gives them financial support to purchase health insurance.

This is not as radical of a reform as depicted by opponents.

Seniors wouldn't be left to the ravages of predatory private insurance companies. The government would sponsor a purchasing pool for seniors. All insurers participating would have to meet benefit requirements and accept all enrollees at the same price without medical underwriting.

That's the way Medicare Advantage operates now, and about a quarter of seniors are already getting their Medicare coverage through a premium-support program.

Romney would follow Ryan in converting all of Medicare to such a system, but with a twist. One of the options would be a government-run, traditional fee-for-service Medicare program.

You could call that a Medicare public option. You know, the kind of thing Republicans violently opposed as part of "Obamacare" for the under-65 crowd.

The intellectual fault lines between the parties on health care are becoming difficult to discern. Democrats support government-sponsored purchasing pools with premium subsidies based upon income for those under 65, but oppose them for those over 65.

Republicans propose them for those over 65 but oppose them for those under 65. Republicans oppose a public option for those under 65 but seem to have no problem with Romney proposing one for those over 65. Ryan said he's hunky-dory with it.

Given that the health-care principles of the two parties basically switch at the age of 65, a health care and Medicare-reform compromise ought to be achievable. Thus far, however, there appears to be no self-awareness by either party that their arguments about the two topics are contradictory.

There are important lessons for Arizona reformers to learn from the overwhelming defeat of Issue 2 in Ohio.

This was Ohio Gov. John Kasich's comprehensive public-employee law that the unions referred to the voters.

It took the kitchen-sink approach. The law ranged from increased employee contributions to their benefit plans, to limiting topics subject to collective bargaining, to pay-for-performance for teachers.

Something that encompassing makes for an easier ballot target. The primary criticism the opposition leveled was over not permitting bargaining on such things as staffing levels for nurses and first-responders.

There are basically two general categories of reforms dealing with public employees: those that control costs to taxpayers and those that make it easier to get government to perform better.

In Arizona, the primary need is to get the cost of public-employee pensions under control before it is too late. The reforms that have been enacted and are under consideration don't come close to eliminating the unfunded taxpayer liabilities in them.

Doing so will probably require fairly significant changes in benefits for existing employees. And that, in turn, will probably require public votes, since benefit protections have been lodged in the state Constitution and city charters.

The lesson from Ohio is: Don't cloud fixing pensions with other reforms, irrespective of how useful they might be.

One of the more intriguing questions coming out of last Tuesday's election is: What were Arizona voters saying about education spending?

In public-opinion polls, voters uniformly say they favor more spending for K-12 education. Yet, on Tuesday, voters rejected a majority of school-district ballot measures that would have authorized more spending.

According to the fiscal eagle-eyes at the Arizona Tax Research Association, there were 51 such measures on the ballot Tuesday. Only 22 of them passed.

Bond measures for large capital projects fared better than most, even though they tend to be the most expensive items referred. Ten of 14 bond measures passed.

Propositions to override state limits on operational spending met a mixed fate. Twelve of them passed; 17 failed.

Overrides to capital spending limits were blanked: None passed and six failed. Both propositions permitting higher spending for K-3 education were defeated.

The lesson, I think, is caution. People support education. But now isn't a good time to be asking for more money, particularly from the property tax.