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Betsy McCaughey, Paul Ryan, and their Latest Health Care Distortions

She’s at it again. The woman who told us that the Clinton health care plan would prohibit doctors from accepting private cash payments (it wouldn’t have) and that the Obama health care plan would “pressure the elderly to end their lives prematurely” (it won’t) has a new op-ed.

I'm talking about self-proclaimed health care expert Elizabeth McCaughey and she appears today, once again, in the pages of the Wall Street Journal.* Her argument is that the Republican budget won’t keep seniors from getting the health care they need--and that the Affordable Care Act will.

It’s the kind of upside-down, black-is-white inversion of reality that would be hard to take seriously coming from almost any other source. But, if recent history is a guide, McCaughey’s influence will only grow with her mendacity. Meanwhile, prominent Republicans like Paul Ryan, author of his party’s budget, have already started making portions of these arguments, albeit in less egregious form, on their own. So I want to look at these arguments a bit more carefully, even if it means giving McCaughey the attention she plainly craves but just as plainly does not deserve.

McCaughey’s argument goes roughly like this: Yes, the Republicans want to take money out of Medicare. But the Affordable Care Act already does that anyway. The difference between the two plans is that the Republicans convert the program into a voucher, unleashing a competitive market that will reduce the cost of medical care, keeping it within reach of seniors. The Affordable Care Act, by contrast, takes management of Medicare away from Congress, giving it to an unelected board of technocrats that will ration care. The elderly will have to wait for treatments or, worse still, have them denied altogether.

There are some details and twists along the way, and I may get to some of those later on. But that’s really the gist of what she's arguing. And, like I said, it’s bolder but not wildly different from what many Republicans and their supporters are saying. From the very beginning of the debate over the budget and, really, from the very beginning of the debate over health care reform, GOP leaders have held up their ideas as a consumer-oriented alternative to the supposedly bloodless and mindless central-planning that ended up in the Affordable Care Act. Just yesterday, according to Politico, Ryan defended the budget in a contentious town hall by saying the Affordable Care Act “puts a board in charge of cutting costs in Medicare” and that the board would “automatically put price controls in Medicare” and “diminish the quality of care for seniors.”

So what aren’t McCaughey, Ryan, and the rest telling you? A lot of things, as usual. But two big misrepresentations stand out.

First, they would have you believe the difference between their favored plan and the Affordable Care Act is entirely about the form of cost-cutting. It’s vouchers versus government insurance, consumer shopping versus central planning. These are important distinctions and I’ll get to them in a moment, but there's another, hugely consequential difference between the two approaches: The Republican budget would take much more money away from seniors than the Affordable Care Act would.**

While McCaughey never acknowledges this, she does make the argument that conservatives often use in defense of these cuts. Competition among plans, she implies, will reduce the cost of health care enough to keep it within the reach of seniors. But I'm aware of no credible evidence in the literature to suggest competition could save enough money to offset the impact of cuts as large as the ones in the Republican budget. The possibility seems even more far-fetched given studies that have shown private insurance is, benefit for benefit, more expensive than public insurance.

This is why the Congressional Budget Office said unequivocally that the Republican budget would leave seniors with much greater exposure to health care expenses. McCaughey dismisses the CBO analysis as "deceptive" and misinformed. ("Kettle, Black Pot holding on line two...") But the analysis, and the agency, deserves better than that. CBO is not merely non-partisan. It also makes predictions based on what it considers the midpoint of reasonable expectations. It's one thing to say (as even I have on occasion) that they have put the midpoint a little too high or low. It's another to say the range is completely in the wrong place. That's essentially what McCaughey and some Republicans want you to believe.

The other misrepresentation in the McCaughey op-ed and, more generally, Republican rhetoric is in their characterization of how the Affordable Care Act controls costs. Ryan's focus on the “board in charge of cutting costs in Medicare” is a reference to the Independent Payment Advisory Board, or IPAB, which McCaughey discusses at the end of her op-ed. But these critics invest it with far more authority than it really has, even as they distort what it'd actually do.

The truth is that the Affordable Care Act adopts a slow, multi-faceted approach to controlling the cost of health care. Instead of relying primarily on cuts in assistance for seniors, as the Republican budget would, the Affordable Care Act puts the onus for cost-cutting primarily on the health care industry. Hospitals would see reimbursement rates decline, device makers have to pay an extra tax, and so on. Seniors are part of this "shared sacrifice" too: Retirees enrolled in private Medicare Advantage plans, for examples, may lose some of the extra benefits those plans offer. But it's primarily the producers and providers of care, rather than beneficiaries, who will bear the brunt of the impact.

More important, the Affordable Care Act doesn’t simply take money out of Medicare. It does so in ways that are designed to realign the program’s incentives, to reward high quality care and discourage the shoddy kind, so that it becomes possible to spend less money without getting inferior treatment. My favorite example of this, because it’s easiest to explain, is a provision that would reduce payments to hospitals with high rates of inpatient infection. You’d think that McCaughey, who is chairman of a group called the Committee to Reduce Infection Deaths, might appreciate that. In any event, it's worth noting that smart people on the left and right have long endorsed these sorts of improvements.

Many of these “payment reforms” will start as pilot projects, because, so far, they’ve only worked on a small scale. And the hope is to replicate the most successful ones nationally. But what if that doesn’t happen? That’s where the IPAB comes in. The law establishes a long-term budget for Medicare, with targets for what the program should cost every year. If Medicare cost exceeds those targets, as CBO thinks is likely at some point in the future, IPAB would make new recommendations to Congress on how to control spending. 

The rationale for IPAB is a belief that doctors, experts, and consumer advocates working together probably have a better feel for calibrating Mediare reimbursements than 535 members of Congress who know more about fundraising than the actual cost of medical goods and services. It's a sensible impulse that's frequently won conservative support, most recently from the chairmen of the Bowles-Simpson commission.

There’s a longer, separate post to be written about exactly what the IPAB could really recommend--and what it couldn’t. I’m going to leave that for later, except to note that, under current law, the board cannot modify actual program benefits. For now, though, the essential thing to remember about the IPAB is that, contrary to McCaughey and the Republicans, Congress retains the final say. It can substitute its own cost-cutting measures or, with a three-fifths vote in the Senate, reject the IPAB proposals outright. Plus Congress always has the ability to amend the Affordable Care Act’s growth targets. (Don't forget, too, that the board's members will all be presidential appointees, subject to Senate confirmation.)

To be very clear, there are reasonable and honest critiques of the IPAB and, more generally, the Affordable Care Act. There are sensible arguments on behalf of making health care more competitive (including some that liberals like me would endorse). And there are sincerely held philosophical objections to universal health care. All of those are worth debating. But those are not the arguments McCaughey and the politicians she supports are making. 

*I’ve mentioned this many times before, but McCaughey’s first articles, during the Clinton health care fight, appeared in the New Republic. We apologized for publishing those long ago. As far as I know, the Wall Street Journal editorial page has never seen fit to correct or apologize for McCaughey’s many egregious and hurtful errors, despite the widespread attention they have received. Perhaps that is why she keeps publishing there.

"I find it sad that someone with Dr. McCaughey’s background cannot make a more constructive contribution to the already confusing debate on health policy," says Uwe Reinhardt, the esteemed and consistently fair-minded Princeton University economist. "When it comes to describing the Affordable Care Act, I would judge her a dubious ally of the facts."

**Specifically, the Republican budget would allow the value of its Medicare voucher to rise in tandem with the consumer price index, or CPI. The Affordable Care Act would eventually set spending targets for Medicare that kept pace with Gross Domestic Product per capita plus one percentage point, or GDP+1.

CPI grows more slowly than GDP and, of course, slower still than GDP+1. The effect compounds over time. Throw in the substantial cuts Republicans propose for Medicaid, on which lower-income elderly rely to supplement their Medicare coverage, and projections suggest the gap in federal health care spending between the two approaches will go from about 1 percentage point of GDP in 2022 to between 7 and 9 percentage points of GDP by 2050.  

In total, according to the CBO, federal spending on health programs would be "sharply lower" under the Republican plan than it would be under current law, which includes the effects of the Affordable Care Act.