By: AIF Staff
Janesville, WI: Last week, American Idea Foundation President Paul Ryan discussed the future of health care on Health 2049, a podcast hosted by Bisi Williams and Jason Helgerson. The podcast features thought leaders sharing their recommendations, perspectives, and views on what health care might look like in the year 2049.
In a wide-ranging conversation, Ryan discussed his experiences trying to advance health care reforms during two decades in Congress. He also detailed his preferences for reforming the social safety net and for moving to a more patient-centered health care system that promotes universal access to quality, affordable care and focuses on innovation, competition, and choice.
To listen to Speaker Ryan’s entire interview on Health 2049, click here. Excerpts of Ryan’s responses, edited lightly for clarity, follows.
Breaking the policy gridlock by putting ‘ideological sabers aside’:
“We spend two times what anybody else spends per person on health care in the world, but we don’t have a system twice as good as anybody else. It’s nothing close, so I think we can get to that. I think we spend enough money. I think it’s the way we spend our money that needs to be changed and I think we need to have a system that accommodates and encourages competition and choice.
“This also means we have to put the ideological sabers aside. From my side, let’s accept universality. Let’s accept that the government is going to be involved. On the left, let’s accept the private sector is going to be involved as well. This cannot be a government granted right where the government decides, controls and rationalizes healthcare.
“I think both sides of ideological extremes need to be pushed to the side. And I think there’s a center, I’d like to say center-right, but a center-based system that can be had.”
Developing an initial interest in health care policy:
“I was primarily a fiscal policy guy concerned about debt, deficits, and the dollar as the world’s reserve currency. When you dig into those issues, it basically takes you to the entitlement programs and when you dig into that, it takes you to health care. So, I walked into the health care issue a little later, about two terms into my tenure in Congress because it became very clear to me that this was the biggest fiscal challenge of our country. And I was representing Southern Wisconsin where this was a big concern, a big issue for my constituents, so it became really clear to me that I needed to learn more about health care.
“I spent a number of years just trying to learn about health care from providers, from consumers, from economists, and then I spent a lot of time with the Committees, with the Joint Committee on Taxation, with the Congressional Budget Office, the think tanks, and in the Budget Committee. I was Chairman of Budget and Chairman of Ways and Means, which are the primary health care committees, so I spent a great deal of my time on this issue….
“I produced a number of different bills: Some passed, many didn’t. I had, with Senator Tom Coburn, the conservative alternative to the Affordable Care Act in 2010 and then I built budgets around health care proposals. I’m currently working on something right now with Jim Capretta at the American Enterprise Institute, to be released later in 2022, so I still spend time on the issue.”
What health care might look like in 2049:
“I hope that we have a fully-funded system that does not have trillions of unfunded liabilities and that is not saddling the next generation with insurmountable debt. I hope this system is characterized as one where everyone has healthcare coverage and you have a system where the health inflation rate is nothing like what it is now and it’s closer to the actual nominal inflation rate, which, frankly, is kind of high right now.
“it’s a system known for and driven by innovation, choice and competition, where markets work. It’s a system where markets are designed in such a way to protect those with pre-existing conditions, and that the preferences and fiscal policy are aimed towards helping the sick and the poor, but that everyone has access to a system where they are guaranteed coverage. It is also a system where those with tough health conditions don’t go bankrupt if they get sick. I believe that this is absolutely achievable.”
Two paths for the future of American health care:
“I think we currently have a system right now that is a fiscal train wreck and we are piling on top of the system unfunded liabilities, which will make for a very, very difficult moment fiscally, right around 2049 actually.
“I look at 2049 and I see either a fiscal train wreck where we lose the dollar’s status as a reserve currency and we have to do immediate budget surgery to the budget where we have to cut benefits back in real time for real beneficiaries, and people who are dependent on these programs and who organize their lives around these promises that have been made by government.
“Or, and this is the glass half-full side of things, things that I think and hope will happen, which is we have a system that doesn’t have a fiscal train wreck, that doesn’t bankrupt the country or our entitlement programs, that is market-based, and that takes taxpayer dollars and puts them where they ought to be, which is toward the sick and the poor.
“As I mentioned, I hope we have a system where you have legitimate health insurance competition and innovation. A system where the American system of innovation is alive and well and we come up with new drugs and new therapies to make our lives healthier, happier, longer. I believe that that’s eminently achievable.
Advancing Patient-Centered reforms to improve health care:
“I have a few white whales in my career that I wanted to slay, that I could never get, one of which is the tax preference for health insurance. The tax exclusion is upside down. We give the biggest tax benefit to the highest income earner and the lowest tax benefit to the lowest income earner. By excluding health care benefits from your job from taxation, the higher the tax rate you have, the bigger the subsidy you get. That is completely wrong. It is the biggest tax expenditure in the tax code. I tried to cap it when I was Speaker and I couldn’t even get the votes for that among Republicans. And the Democrats tried it with the Cadillac Tax, which is very controversial on their side as well and keeps getting pushed around, but so I think Obama was going at it the wrong way with the right idea with the Cadillac Tax.
“What I wanted to do is repeal that tax exclusion. I wanted to convert it to a fixed, refundable tax credit so that more of the money goes to low-income individuals and families, less to upper-income individuals. We should throw a deduction on top for those people and allow people to take that refundable tax credit to buy health insurance….
“And when you roll into retirement, I’m a big believer in a premium-support model for Medicare. They should be set on a bid-based pricing system so that market bids are what set the rates. Even the Congressional Budget Office, under Doug Elmendorf, built a model that showed it’s the smartest way to reform Medicare. I think this would put Medicare on a much better footing. It reduces the unfunded liability and if we go to a premium-support model with Medicare — with more for the poor, more for the sick, less for the healthy and the wealthy within the Medicare system, where you have a number of plans to choose from, to a premium support model, much like the federal employee health benefit plan, I think you can mitigate or avoid a debt crisis.
“The fee-for-service system, which is more than half debt-financed, is tumbling toward a debt crisis in about the year 2049 and, frankly, if you would convert our system to a premium support system, with the kind of system for the under 65 population that brings in choice and innovation, it would hopefully have a mitigating effect on inflation. Then, I think you’ll have a system for under 65 and for over 65 that works quite well.”
Preserving the Social Contract in a bipartisan way:
“It’s going to be ugly for a while, politically speaking, but I think the math is going to get us. I think the realization that these programs are running into fiscal reality, which jeopardizes their own viability, will spur action.
“The social contract is an important concept. It’s very important…. I see the social contract as extremely important — a viable safety net for the poor, health and retirement security for those who are in old age, and then all the other things we talked about in between.
“For that to be sustained in this century and on, it will have to change. These were designed in the 20th century with 20th century economics, and 20th century debt demographics, all of that is changing for the reasons we just discussed and I think Congress will get there because they will have no choice but to get there. And the bond markets will make them do it.
“I think the only real viable way in the mid-term, not this year, this session, or even probably the next session of Congress, is a commission. I hate it. Like I said, I was on Bowles-Simpson, I served on some of these commissions, but I’m not a big fan of them because I think it’s Congress ducking its responsibility, but Congress is just too broken to take all of this on on their own.
“My buddy, Senator Mitt Romney has a bill with a commission where I think he has an equal number of Democrats and an equal number of Republicans to take on these entitlements and to have a forced up or down vote, like the base closing commission…. I believe the rightly-formed commission in the right Congress with the right President can put before Congress a solution to this problem that can buy us decades and really chip away at this problem and pass Congress in the medium term. I think that’s probably the best and easiest most viable path forward to solve this problem.”