Matt Miller - The Archives
What Wyden-Ryan hath wrought
The Washington Post, December 15, 2011

The new Wyden-Ryan Medicare framework is the most fascinating policy and political maneuver of the year. Let me try to explain why.

First, until this moment, Rep. Paul Ryan's original Medicare plan had been slated to be the centerpiece of the Democrats' 2012 campaign, featuring all the predictable cries that the GOP is tossing Grandma off a cliff. By making sufficient adjustments to his plan to be able to draw the cooperation of a Democrat like Sen. Ron Wyden (Ore.), Ryan has plausibly inoculated his party against a full-frontal Mediscare campaign. Or at least he gives Republicans a credible rebuttal to neutralize it. After all, Wyden got into politics as the founder of the Oregon chapter of the Gray Panthers. The man's been a champion for seniors for 35 years. If he's standing with Ryan on Medicare, how evil can Ryan (and the GOP) be?

For Wyden's part, he's bravely chosen to incur the wrath of his fellow Democrats for having blunted their demagogic spear. But he's right to, because, as I've argued previously, it's quite possible that done right, premium support can be part of the answer to Medicare's long-term woes. Wyden has always been one of the few senators focused on big, creative, bipartisan solutions; Wyden-Bennett, for instance, which would have moved us sanely beyond our archaic employer-based health system, was always the best of the health-reform plans offered (and one that cost poor Robert Bennett his job in the Senate).

In this new plan, Wyden gets Ryan to sign onto a key component of that earlier reform. Though it has nothing to do with Medicare, Wyden-Ryan would allow firms with fewer than 100 employees the option of giving their workers (on a tax-advantaged basis) the cash the firms would have spent on their health coverage to buy, voucher-style, other policies. Since most small firms offer just one health plan, this is a huge victory for choice. It means that as many as a third of American workers could use the new health-care exchanges—a fantastic expansion of access to the exchanges that was perversely killed by both big business and big labor in the Affordable Care Act endgame.

But there's more. With this new plan, Ryan has signed onto the idea of subsidizing people to buy coverage from well-regulated health exchanges that must take all comers and charge them similar premiums regardless of health status (provisions that did not exist in Ryan's previous premium-support plan). If that framework sounds familiar, it should—it basically describes the dreaded Obamacare! And here's the kicker: Wyden-Ryan has a public option to boot, because fee-for-service Medicare would remain an option for seniors. If you're with me, Ryan is now on record for the Affordable Care Act model, more generously funded than was his previous plan, with a public option. But just for seniors. Oh, and for workers at small firms representing a third of America's total employment. Paul Ryan is so close to universal coverage he can almost taste it!

Head-spinning, indeed.

But there's still more. The arcane, yet crucial, change from Ryan's previous premium-support model is that the annual growth rate for the voucher in Wyden-Ryan would be based on nominal gross domestic product plus 1 percent. In Ryan's original plan it increased yearly only by inflation, which is much less, especially compounded over time. Ryan's early, stingier voucher trajectory led my old boss, Alice Rivlin, to walk away from the plan she'd worked on with Ryan and led directly to the Congressional Budget Office's assessment that Ryan's plan would shift massive costs to seniors over time. But Ryan chose that stingier voucher for a specific political reason. Given that tax increases were off the table in his budget as a matter of politics and ideology, it was the only way to show enough long-run budget savings so he could claim his plan would balance the budget eventually, by 2035.

I always wondered what would have happened if Ryan had stuck to the more generous voucher he and Rivlin had discussed. Now, with Wyden, we'll see.

But here's the delicious part. Follow the bouncing ball: Ryan went lean on his earlier voucher plan because he needed to show budget balance at some point (even if it's a ridiculous 24 years from now). And because he dishonestly pretended that we don't need to raise taxes as baby boomers retire, he had to get all his savings from Medicare. Now that Ryan has gone more generous on his voucher to partner with Wyden and to get political cover on Medicare, that means his long-term budget—updated with this new Medicare framework—will never balance the budget. In fact, my guess is it adds $50 trillion to the national debt by mid-century. Someone needs to run these numbers ASAP.

I assume Ryan will still try to play a double game—getting the Medicare cover from Wyden that his party craves while pretending his overall budget plans solve the problem.

But the gig's up. Wyden has put Ryan in a box where he can be forced to admit that there's no way to get our long-term fiscal house in order without higher taxes as the boomers age. (I know it must seem crazy to get excited about forcing a politician to admit the obvious, but that's the kind of breathtaking intellectual dishonesty on taxes we've been dealing with). If the media are smart and persistent enough to force this question of Ryan's endless debt, Wyden will have set in motion a Republican "uncle" on taxes that could fundamentally alter policy debate in the years ahead.

It's complicated but fascinating.

Now if only these guys could come up with a jobs bill...