a citizen’s journal by Thomas Nephew

Van Hollen OK on Medicare — but “willing to consider” Social Security “spending reform”

Posted by Thomas Nephew on 21st November 2012

Click image to view C-SPAN clip of Rep. Chris Van Hollen’s (D-MD-8) discussion of
Medicare and Social Security in the context of the “fiscal cliff” — running from
~8:15-14:30 in the full C-SPAN video of his interview with Wall Street Journal
deputy editor Alan Murray.

Last week I got a worrisome Progressive Change Campaign Committee (PCCC)  e-mail: the Wall Street Journal was reporting that Rep. Chris Van Hollen (D-MD-8),  my Congressman — and the ranking Budget Committee member — was open to  “cutting entitlements,” as a part of negotiations around ending tax cuts and avoiding the so-called “fiscal cliff.”  Journal reporters Janet Hook and Carol Lee added that Van Hollen — who was attending a Wall Street Journal confab with CEOs — said “changing Social Security and increasing the Medicare eligibility age above 65 should be part of negotiations,” and that “I’m willing to consider all of these ideas as part of an overall plan.”

Personally, I think the current deficit mania is disastrously misguided at a time when the economy is still struggling.  But  I certainly want Social Security and Medicare benefit cuts completely off the table — so I called Van Hollen’s DC office to say so.  A staffer told me he’d been misquoted, leading me to wonder, “So what exactly *did* Van Hollen say about Social Security and Medicare?

Luckily, it turns out that the interview was taped by C-SPAN, so I could see for myself; the relevant remarks started around the 8:15 mark and continued for another six minutes.

Van Hollen began with Medicare, and to cut to the first chase, he did not advocate increasing Medicare eligibility age as the Journal had reported.  Instead, Van Hollen’s ideas were generally about seeking efficiencies in Medicare rather than reducing access to it:

We need to move Medicare away from a fee-for-service system. And we’ve begun to do that.  Because fee-for-service systems contains no incentives for anybody in the system to contain costs.  … We’ve actually begun to put in place the building blocks to get there: accountable-care organizations, bundled payments.

I think we can make significant savings in the area of … dual-eligibles: people who are on Medicare and Medicaid -  a relatively small percentage of the overall Medicare/Medicaid population but a very high percentage of the costs. And there are lots of misaligned incentives between the Medicare and Medicaid payments.

You can look at things like redesigning “Medigap” policies, because right now, some Medigap policies actually create incentives for people to spend a lot more on Medicare.*  [...] 

What I think we should avoid is …simply transferring [health care] costs on to other individuals.  I think our first focus should be on trying to contain overall healthcare costs

Regarding substituting “premium-support” voucher plans for Medicare, Van Hollen responded:

…the nonpartisan Congressional Budget Office looked at that and concluded it does not contain costs, it simply transfers costs. …what they concluded was if you simply …provide a voucher to go out there in the private health care system, as you know, in the private health care system costs have been rising at at least the same rate as in the Medicare system.   [...]  Simply transferring somebody out of Medicare to the private health insurance market, it will save Medicare money, but …by requiring premiums to go up dramatically on these individuals whose median income is $23,000 right now.

I quite agree with Van Hollen’s opposition to “here’s a lump sum, go figure it out” voucher plans that discourage seeking medical help and transfer costs to the poor instead of helping them.  People more knowledgeable than myself may take issue with some of Van Hollen’s Medicare suggestions — e.g., maybe there can be good reasons for dual eligibility (though less so for inconsistent subsidies).  But overall, and to his credit, Van Hollen’s solutions are quite a bit less less draconian than simply raising the Medicare eligibility or retirement ages — a.k.a. “hope you die first.”

Turning to Social Security, however, Van Hollen stumbled right out of the block:

 In Social Security, number one, I think we should create a process like we had with Ronald Reagan and Tip O’Neill. 

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