Ryan Says Rich Should Pay More as Sanders Defends Entitlements for Wealthy

By Brian Faler
Bloomberg, May 30, 2011

Bernie Sanders, the U.S. Senate’s only avowed socialist, may be the chamber’s fiercest advocate of taxing the rich to cut the federal deficit. That doesn’t mean he wants to reduce their Social Security and Medicare benefits.

Representative Paul Ryan, the Republican chairman of the House Budget Committee, wants to give the wealthy big tax breaks to encourage them to invest and create jobs. He also wants to take away many of their retirement benefits.

Democrats say Social Security and Medicare have endured because they offer benefits to people of all incomes, and accuse Republicans of trying to kill the programs by stripping away their beneficiaries, beginning with the rich. Republicans say the fairest way to curb the deficit is to scale back the programs for those who need them least.

With polls showing the public supports limiting benefits to the wealthy, and some Democratic leaders signaling a willingness to consider the idea, the rich may face cuts as lawmakers debate how to curb the national debt.

Sanders, 69, said the debate isn’t just about numbers.

“The strength of Social Security and Medicare is that everybody is in,” the Vermont independent said in an interview. “Once you start breaking that universality and you say that if you’re above a certain income, two years later that income goes down and 10 years later it becomes a welfare program.”

Republicans say the waves of retiring baby boomers, as well as increasing health-care costs, are the real threats to the programs because the benefits are unsustainable.

“The thing that tears the social contract is insolvency,” said Ryan, 41, a Wisconsin Republican. “Means-testing is an obvious solution to our fiscal problems,” he said. “The alternative is everybody gets cut, so why don’t we put the money where it should go — to the people who need it.”

Representative James McDermott, a Washington Democrat, said providing benefits to those who don’t need them is a small price to pay to ensure the programs are available to everyone else.

“I don’t worry about paying a few benefits to Warren Buffett or Bill Gates,” he said. “As long as we make absolutely sure we got public support” for the programs.



By Don McCanne, MD

Paying for health care and receiving health care are two different issues.

Under an ideal system, everyone should receive all essential health care services that they need without having to face financial barriers that might prevent them from accessing that care.

Since health care now has become so expensive that many cannot afford it, an ideal system would also finance that care based on the ability to pay. Those with greater means would pay more. Also, since the need for health care is very unevenly distributed, an insurance function of pooling the costs is absolutely essential.

Assuming that everyone gets the care that they need, there are two fundamental ways of paying for it. You can fund the entire costs in advance through a single risk pool. That is the simplest administratively and certainly would be the most equitable if each person contributed a given amount based on their means – most easily accomplished through progressive taxes.

The other way would be to establish a catastrophic risk pool through taxes or premiums that only partially fund care, and then assess cost-sharing payments (deductibles, co-payments, coinisurance) based on services received, at the time they are received. Since ability to pay remains an issue, to ensure access each individual would have to be means tested to determine what subsidies would be required (as in the Affordable Care Act). This greatly increases the administrative complexity and costs of financing care. The health care provider, the payer, and the patient each must account for each and every service and the allocation of responsibility for payment.

Although insurance premiums are normally thought of as a method of financing the risk pool, they have taken on a new twist in Medicare Part B (physician services) and Part D (drug benefit). Although these programs are partially funded through the tax system, the additional Part B and Part D premiums assigned to the individual beneficiaries are now means tested. In a sense, they are now accounted for as a means tested but negative benefit. The greater one’s means, the less the benefit. This is an important strategy  of the opponents of Medicare because it weakens the support of the more affluent members of our society and risks converting Medicare into a welfare program.

If all health care has already been prepaid by taxes paid into into a common risk pool, then none of this is necessary. The patient simply receives needed care, and that’s it.

Professor Leonard Rodberg, from Queens College/CUNY, has described this concept in these insightful comments (personal communication):

“The central feature of the Canadian health care system is not that it is a single payer system; it is that financial considerations do not enter into the patient’s decision to seek medical care, nor in the doctor’s decision on what treatment to recommend for the patient. It is not only that there is no exchange of money between patient and doctor; the patient has to pay no money for the visit at any time. There is no fighting with the insurance company to get a claim paid, and no complicated bookkeeping on the part of either the patient or the doctor.”

“We in PNHP have often observed that the term ‘single payer’ is not helpful in explaining what we mean by a national health program. I learned in Canada that it also doesn’t describe the essence of what we are seeking. We tend to treat the absence of cost-sharing as simply a feature of the single payer plan we want. I am now convinced that, instead, we should view the removal of financial barriers to care as the core of what we advocate: no billing of patients, no cash exchange between patient and provider, no checking with insurance companies, etc.

“Too often, we speak as if our goal is a single payer system. I believe that is a mistake. Our goal should be the removal of all financial barriers to care; a single payer system is simply a means, and not the only means, to that goal. What makes the Canadian system, and others, work so well is not its single payer character, but the fact that funding of the system is completely separated from the delivery of care. That should be what we seek through a national health program.”

Re-posted with permission from pnhp.org