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The Ryan Plan As A Starting Point

The New York Times notes that House Republicans aren't exactly falling over themselves to campaign on the Ryan Roadmap.  I like Ryan.  He seems like the kind of politician who is more interested in principle than short-term political advantage.  His Roadmap (though perhaps not perfect) is an attempt to create a responsible and internally consistent program for solvency rather than cynical positioning.  I doubt most of the House Republicans who are refusing to sign up for the Roadmap are being idealistic.  Most are probably looking at the state of the economy and the generic ballot.  Why risk it all by signing up for a plan that includes major cuts to middle-class entitlements?  But the more cynical House Republicans might be right on this one.  The Ryan Roadmap is a good starting point for intraconservative conversations about how to restructure economic policy, but it should not be the official or semi-official policy agenda for the GOP in 2010 or 2012.  The Roadmap has several political flaws that make it dangerous, but that can be improved upon.

The first problem is that the Roadmap seems to raise taxes on the middle-class while cutting them on the rich.  this could hardly tee up the tax issue better for Democrats.  Having passed tax cuts for most and being in the process of raising taxes on high earners, the Democrats could play off a Republican plan that would do the opposite. The ads write themselves.  In this sense, Ryan's plan is worse than the tax plan that McCain ran on in 2008.  While McCain's plan didn't offer many positive policy changes to most people in the middle-class, at least it didn't offer a tax increase.  An alternative to the Ryan tax plan would be a policy that cut taxes on investment and most middle-class families while raising taxes on some high earners (but to no more than 35% of their income.)

A second problem with the Ryan Roadmap is its approach to health care reform.  The Roadmap's tax treatment of health insurance would destroy the current system of employer provided health insurance and throw tens of millions into the individual health insurance market.  The theory is that this new class of health care consumers who will be spending more of their own dollars on health care will put pressure on health care providers to bring down costs.  I'm down with the theory, but I can see why most people might disagree.  You would lose your employer-provided coverage that is worth x number of dollars and be given a tax credit smaller than the value of your current insurance.  So either you buy "inferior" coverage or you pay more for the same level of coverage.  Or maybe you both pay more and get less.  This is a liberal demagogue's dream.  Supporters of the Roadmap's approach might argue that structural changes in the market will bring down costs for the individual, and that cheap, renewable, and individually owned health care policies will increase your health security (since you would keep them if you changed jobs),  and that health care costs off your employer's books will increase your take home pay.  The problem is that all the benefits are speculative and the downside risk seem enormous.  One of the most important strategies to achieving market-oriented health care reform will involve crafting a series of incremental policies that show demonstrable benefits to subgroups without forcing the mass of Americans into a terrifying leap.  This mean creating choices for people who might want to trade less coverage for more take home pay or more disposable income.  The successes (hopefully) of those subgroups could then be used as arguments in favor of more comprehensive reforms.  

I'm glad that Ryan is out there selling his approach.  The more people who know about his idea the better, but there is no one right and politic answer when it comes to health care policy.  Here are some suggested policies that individual Republicans might run on (aside from the obvious and worthwhile ones on which there is already a Republican consensus like repeal Obamacare, tort reform ad interstate purchasing):

1.  Add a market-based option for Medicaid clients based on Mitch Daniels' Healthy Indiana Plan.  This would require tinkering with the funding mechanism for Medicaid and would have to make state acceptance of Medicaid funds conditional on removing coverage mandates that might make such a plan illegal in that state.  It would also tend to encourage states to liberalize their insurance markets.

2.  Add an HSA/catastrophic coverage plan modeled on the Mitch Daniels plan for Indiana state employees to the health insurance options available to federal employees.   

3. Invest in better designed and better funded reinsurance pools for those with preexisting conditions..      

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