Is the GOP Serious About Means-Testing?
Can we get beyond the welfare state?
Yuval Levin argued yes in an article in National Affairs.
I argued no, here.
Now Reihan Salam at NRO joins the discussion.
Reihan's contribution is to defend the concept of means-testing social benefits. He points out that Australia seems to have achieved positive results by means-testing. What's wrong then with Yuval Levin championing (and Paul Ryan legislating) the means-testing of Medicare?
Some answers to Reihan.
1) This is not a debate about means-testing. The Paul Ryan plan does not means-test Medicare, with some getting Medicare in full, but others paying more. After the Ryan plan goes into full effect ten years hence, nobody will get Medicare as it currently exists. Everybody will get a voucher that falls more or less short of what is needed to buy a Medicare-like policy. The vouchers for the affluent will fall even further short than the vouchers for the poor. But the vouchers for the poor will fall short too.
2) Most welfare state programs are in fact means-tested, entirely uncontroversially. Not even Jesse Jackson thinks that everybody should get food stamps. Medicaid is means-tested. Section 8 is means-tested. Unemployment insurance is not precisely means-tested, but you only collect if you are out of work. Ditto for the federal subsidies for COBRA benefits contained in the 2009 stimulus. (Plus those subsidies can be taxed back later from people who return to highly paid work.) If there is a debate about means-testing these classic welfare programs, I don't know who is on the other side.
3) Yet there are important social programs in the U.S. that are not means-tested. I'd be interested to hear which of the following Reihan and Yuval think should be means-tested: veterans benefits? home mortgage deductibility? farm programs? in-state college tuition? I agree that the American welfare state all too often redistributes upwards. One important reason for this upward-redistribution is that much of the "spending" in the federal welfare state takes the form of tax deductions and tax credits - and the Ryan plan is noticeably hazy about those.
4) It's true that Australia does a good job of means-testing benefits. But there is one benefit that Australia confers on virtually everybody, with only some slight clawbacks from the more affluent. It happens to be the benefit that Americans are debating most intensely right now: health care. All Australians are guaranteed health insurance. Through a program called Medicare, as it happens. Old and young. Rich and poor. Everybody.
5) Meanwhile, on this side of the Pacific, Medicare spends an average of $12,000 per recipient. In the past, that cost has approximately doubled every 10 years. If that trend continues, today's 54-year-olds - the first cohort to be affected by the Ryan plan - will face premiums averaging $48,000 per couple. Today's 44-year-olds will face premiums averaging $96,000 per couple. Per year. And rising.
Perhaps those trends will slow. Let's hope they do. But there is no way on earth that the typical American family - hell, that the bottom 80% of American families - can accumulate the savings over their working lives sufficient to buy Medicare insurance as it has been known to this date.
I'm all for ferocious cost-cutting within Medicare. I'm all for intensified competition. I liked the concepts in Ryancare back when they were still called Romneycare. But let's face it: until those concepts start working so brilliantly effectively that Medicare costs actually drop, means-testing in Medicare is code for denying Medicare to many, many older Americans.
Is that what Yuval Levin and Reihan Salam want? I don't believe it. But if it's not what they want, this would be an excellent time to speak out - before this policy is publicly identified as the agreed policy of the conservative movement and the Republican party.
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