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Common ground between Republicans and Democrats on health reform… sort of

For the past two years, Republicans arguments against the Affordable Care Act have gone well beyond simple disagreement over policy choices– they’ve attacked it as a radical assault on freedom, “socialized medicine,” and a “government takeover of healthcare.” (Despite the fact that it’s based on an approach that many Republicans have supported in the past.)

And so it was refreshing to that see Greg Mankiw, former Chairman of President Bush’s Council of Economic Advisors and current advisor to Mitt Romney, has written an editorial in the New York Times attempting to lay out some areas where Democrats and Republicans fundamentally agree. For example, on the individual mandate, he says:

Perhaps the most controversial piece of the Obama plan is the mandate for individuals to have health insurance. But think for a moment about what this really means. No one has proposed putting the uninsured in jail. Instead, those without insurance will be fined. A mandate is just a financial incentive to have insurance.

What is the Republican alternative for having more people insured? It is unclear what the Republicans would do if they ever succeeded in repealing the health care reform law. However, their last presidential nominee — Senator John McCain — proposed a tax credit for buying health insurance. That may seem more palatable than a mandate, because it uses a carrot rather than a stick.

But consider who would pay for that tax credit. The answer is all taxpayers. This tax burden would be particularly hard on the uninsured, who would face higher taxes without enjoying the credit’s benefit. In other words, giving a tax credit to those who buy insurance is a back-door way to impose fines on those who don’t.

His editorial makes some other fair points, but on one area of consensus, which he calls “The Value of Competition,” Mankiw tries to pull a fast one. He writes:

Representative Paul D. Ryan, Republican of Wisconsin, has attracted much attention with his plan to reform Medicare. He proposes replacing the current fee-for-service program, in which the government picks up the bill for medical expenses, with a “premium-support” system in which seniors use federal dollars to choose among competing private insurance plans.

Democratic critics of the plan suggest that enacting it would be akin to pushing Grandma over a cliff. But they rarely point out that the premium-support model is in some ways similar to the system set up under President Obama’s health care law. If choosing among competing private plans on a government-regulated exchange is a good idea for someone at age 50, why is it so horrific for someone who is 70?

Since he asked… two reasons. First, liberals would have preferred making the entire health care system more like Medicare (in other words single payer). Realizing they didn’t have the votes to pass single payer, they felt that a government-regulated exchange was better than the status quo of no coverage for many Americans. But they do not feel it’s better than Medicare.

Second, (and Mankiw fails to mention this) liberals object to Ryan’s plan because, unlike the Affordable Care Act, the premium support would fall far below the cost of private insurance. As The New Republic’s Jonathan Chait points out:

Even if liberals did prefer to turn Medicare into a private insurance voucher, they would strongly object to his plan to make the vouchers grossly and increasingly inadequate to the cost of a plan.

By the way, without this massive cut in funding, transforming Medicare to a system of subsidies for private insurance, would according to the CBO, actually increase the cost of health insurance. Chait explains why:

It would interject a costly insurance bureaucracy into the system, and decrease the leverage of the insurer, by fragmenting the market into private insurers who lack Medicare’s bargaining power.

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