Here’s a two-fer on Medicare. The key takeaway is that any politician who thinks Medicare can be saved as-is doesn’t understand math. Unfortunately, a large chuck of America doesn’t understand math, thus the politics is often at odds with reality.
Underneath Newt Gingrich's rhetoric last week about Paul Ryan's "right-wing social engineering" was a common anxiety about the politics of Medicare: Is this the right moment for entitlement reform? Is Mr. Ryan's proposal really too "radical" after all?
Entitlement reform is the hardest challenge in politics, which is one reason we oppose all new entitlements. But Republicans now tempted to retreat at the first smell of cordite need to understand that they are taking even larger political and policy risks than Mr. Ryan is. The Medicare status quo of even two years ago, much less 20, is irretrievably gone, and anyone pining for its return is merely making President Obama's vision of government-run health care inevitable.
As a matter of simple arithmetic, this problem can't be solved with tax increases, because health costs and thus government spending on health care are rising so much faster than the economy as a whole is growing. The U.S. capacity to pay for Medicare on present trend diminishes every year.
With ObamaCare, Democrats offered their vision for Medicare cost control: A 15-member unelected board with vast powers to set prices for doctors, hospitals and other providers, and to regulate how they should be organized and what government will pay for. The liberal conceit is that their technocratic wizardry will make health care more rational, but this is faith-based government. The liberal fallback is political rationing of care, which is why Mr. Obama made it so difficult for Congress to change that 15-member board's decisions.
Republicans have staunchly opposed this agenda, but until Mr. Ryan's budget they hadn't answered the White House with a competing idea. Mr. Ryan's proposal is the most important free-market reform in years because it expands the policy options for rethinking the entitlement state.
The reality is that Medicare "as we know it" will change because it must. The issue is how it will change, and, leaving aside this or that detail, the only alternati ves are Mr. Ryan's proposal to introduce market competition or Mr. Obama's plan for ever-tightening government controls on prices and care.
Medicare reform has risen to the top of the national agenda and will be the defining issue of next year's elections. The outcome of this debate will greatly shape America's fiscal future, because without substantial Medicare savings the budget cannot be balanced. Period.
The second largest federal program and the fastest growing—with long-term liabilities in excess of $38 trillion—Medicare now threatens to bankrupt the U.S. government in the next few decades. The window is closing fast on our ability to reform it without touching current retirees' benefits.
But which part [of the Ryan plan] is the radical one? Is it the provision that guarantees that today's Medicare benefits and eligibility remain exactly as they are for seniors born before 1956, and for everyone else for the remainder of this decade? Or is it the part that gradually raises the retirement age to 67 from 65 over a period of 12 years starting in 2022? Or is it the section that gives all beneficiaries a lot more coverage options, similar to the array of health-plan choices currently enjoyed by members of Congress?
The answer, we suspect, is none of the above. For the Democrats, the real concern is that requiring health-insurance plans to compete for seniors' business would actually work to hold down costs, proving once again that markets are more efficient than government. In other words, for the party of government, it's about maintaining the government's monopoly.
The politics of spending has changed. Most Americans understand the math and recognize the challenge. They want to get behind bold, principled entitlement reforms that can save the country from a debt collapse while making the safety net stronger and individuals freer. The Ryan plan plus Medicare freedom is such a reform.
Any serious GOP presidential candidate must be absolutely clear on this issue. Kicking the can down the road is no longer an option. A candidate who is timid on entitlement reforms is not qualified to be president.