Democrats really, really, really do not want Donald Trump to dramatically overhaul Medicare, replacing the current universal guarantee of government-provided health insurance for senior citizens with a voucher to buy private insurance.
But they’d sure like him to try.
“Make our day,” was Senate Democratic Leader Chuck Schumer’s exact phrase.
And it’s not just Schumer. Joe Donnelly is a very moderate Democratic senator who, not coincidentally, represents the generally quite conservative state of Indiana. Trump won 57 percent of the vote in the state to just 38 percent for Hillary Clinton. And he’s up for reelection in 2018. Donnelly, in other words, is a guy with a lot of incentive to find places to agree with Trump.
But when Trump announced that Rep. Tom Price (R-GA) would be his secretary of Health and Human Services, Donnelly fired off a press release vowing opposition to Price’s confirmation, slamming him as “a leader in pushing for Medicare privatization.” Over at the opposite side of the Democratic caucus’ ideological spectrum, Bernie Sanders’s response to Price was essentially the same as Donnelly’s.
Every Democrat in Washington is chomping at the bit to wage this fight, which is exactly why they may not get it.
House Republicans want to drastically alter Medicare … in theory
The story here goes all the way back to House Speaker Paul Ryan’s time as the ranking member of the House Budget Committee in the early days of the Obama administration. Back then he drew up a comprehensive long-term budget plan for the United States that would reduce the long-term federal deficit while cutting taxes dramatically and modestly boosting military spending.
Medicare, as it has been understood from the early 1960s until today, is a fundamental conceptual obstacle to that goal. Medicare is a program that pays for senior citizens’ health care. In a country where the senior share of the population is rising and where health care is growing as a share of the economy, that implies a consistent upward trend in Medicare spending. In the short run you can cut taxes, boost military spending, and reduce borrowing without touching Medicare by absolutely hammering spending on programs that aim to assist households with low incomes. That’s exactly what Ryan’s budget frameworks do, but at a certain point the War on the Poor simply doesn’t cut enough spending to offset the relentless upward march of Medicare.
So Ryan’s plan is to eliminate Medicare as we know it and replace it with a different program that would provide cash subsidies to elderly Americans that they could use to go buy private health insurance.
This does not save money per se — indeed it increases costs — because Medicare is able to use the government’s large purchasing power to drive down the per unit cost of health care services to a lower level than the private sector is able to achieve. But having put the subsidy framework in place, Ryan then simply prevents the subsidies from growing too quickly over time. Wealthier seniors will, presumably, cover the difference out of pocket. Less wealthy seniors will simply suffer, just as lower-income household suffer under Ryan’s proposals to slash spending on Medicaid, food stamps, housing vouchers, and other forms of low-income assistance.
Ryan went through a few different iterations of this plan after he became chair of the Budget Committee, but the basic framework remained intact. As speaker of the House, he continued to endorse this trajectory. His successor as chair of the Budget Committee, Price, did as well. So when Trump chose Price as his secretary of Health and Human Services, it was a plausible inference for Democrats to make that this was a green light to House GOP plans.
Medicare cuts could be a political disaster for the GOP
Donald Trump was in many ways an extreme figure in American politics, but in a couple of key respects he represented a moderation of Republican Party policy positions away from conservative orthodoxy. His embrace of trade protectionism has gotten the most attention, but his explicit repeated promises during the 2016 campaign to avoid cuts to Social Security or Medicare were arguably just as significant.
After all, Democrats have been all over the map on trade policy over the years but every Democratic Party presidential candidate since FDR has run as a champion of New Deal retirement programs. If you’re looking for an issue that could have induced traditionally Democratic-voting secular white working-class Northerners to abandon their historic partisan allegiance, the sudden evaporation of this issue after decades of consistent partisan conflict is probably a good place to look.
This is one big reason why Democrats are so eager to engage with this fight. The story Democrats tell themselves about their comeback from political oblivion in the winter of 2004 to 2005 is that it all started with opposing George W. Bush’s Social Security privatization plan, an agenda he was always officially in favor of but downplayed during his reelection campaign. For Trump to actually pull a 180-degree reversal on such a critical issue would be a godsend for his political opponents and they know it.
The problem is Republican senators also seem to know it.
Ryan is still formally committed to this agenda, but his colleagues in the upper house seems considerably more skeptical.
“We’re going to have a whole new look at a lot of things,” a hesitant Orrin Hatch, who chairs one of the relevant committees, told Politico, “It depends on what it is. It depends on how it is written. It depends on what it would do.”
Lamar Alexander, who chairs the other main committee of jurisdiction, said that throwing Medicare onto the pile along with repealing the Affordable Care Act would be “biting off more than we can chew.”
This means Democrats seem more likely to get what they say they want — no Medicare privatization — than the brutal political battle over Medicare that they truly crave.
The Trump agenda has a big math problem
Ryan and Price and other architects of the GOP Medicare privatization plan didn’t come up with this plan for no reason. On one hand, it’s an enormous priority for the Koch brothers and other ideologically minded conservative mega-donors whose significance in Republican Party politics was rising sharply until the Trump disruption. On the other hand, it’s simply mathematically necessary to make the Republican agenda work.
Ryan wants a big tax cut, he wants a lot of military spending, and he wants long-term deficits to decline. You simply can’t make that work without touching Social Security and Medicare.
Trump’s solution to this problem on the campaign trail was to adopt one of his favorite strategies and just lie. He asserted that he could do a tax cut that was a lot bigger than Ryan’s, and increase military spending, and enact an expensive boost in veterans’ health care benefits, and leave Social Security and Medicare untouched, and also balance the budget. This made for good electioneering, but it’s quite clearly not true.
The first pledge to go, obviously, will be the balanced budget. Like Ronald Reagan and George W. Bush before him, Trump will discover the benefits of large and rising deficits to any politically savvy tax-cutter.
But there are limits to how far one can go with this. Today’s labor market is much healthier than the one that greeted Obama, Bush, or Reagan during their first terms, and the Federal Reserve is already in a cycle of slowly-but-surely raising interest rates in response to a falling unemployment rate. Drastic deficit increases, under these circumstances, could lead to sharp increases in private sector borrowing costs that Trump and the GOP would want to avoid. Something is going to have to give. It seems unlikely that it would be Medicare, but equally unlikely that it would be tax cuts or military spending.
How Trump will think about translating unrealistic promises into the dull reality of governance is anyone’s guess, but Democrats are sure hoping Ryan and Price can talk him into giving their way a shot.