Paul Krugman seeks to slay a “zombie” claim regarding health reform—something he says is untrue but seemingly impossible to get rid of. Krugman writes:
Let me highlight a domestic zombie that I see emerging in comments: the notion that if Medicare starts limiting the procedures it will pay for, this would be an infringement of your freedom of choice. I even see some people saying that it’s unconstitutional…
But nobody is proposing that the government deny you the right to have whatever medical care you want at your own expense. We’re only talking about what medical care will be paid for by the government. And right-wingers, of all people, shouldn’t believe that everyone has the right to have whatever they want, at taxpayers’ expense. The Declaration of Independence did not declare that we have the right to life, liberty, and the all expenses paid pursuit of happiness.
Greg Mankiw points out that Krugman may well be wrong in his basic claim; some prominent administration supporters do want to limit what private healthcare coverage will provide.
But I want to hit on a different point to highlight a distinction between Medicare under the Affordable Care Act and so-called “premium support” proposals from House Republicans authored by Representative Paul Ryan (R-Wisconsin).
Medicare generally prohibits “balance billing,” which means that a participating doctor can’t charge fees over and above what Medicare pays. That’s not such a big deal when the Medicare spending floodgates are wide open. But when Medicare starts cutting back on what it will pay doctors and prescribing the types of treatments that work best, it’s a problem. Why? Because the prohibition on balance billing means that you either have to accept what Medicare will provide or you have to pay for the entire procedure yourself—you can’t simply pay the difference between what Medicare will cover and what you want to receive. Since most people can’t afford to pay the full amount, in practice you get what Medicare will provide and that’s it. In effect, patients who could and would pay more for a preferred treatment will be prohibited from doing so.
Under a premium support plan, by contrast, the government pays a set dollar amount that individuals use to purchase coverage from a set of approved insurers, much as federal employees do today. If you want more than the government will provide you, pay only the difference between the two, either by purchasing a more generous policy or by going out-of-network for a particular procedure. The intent is to give patients some skin in the game and generate incentives for cost-consciousness. But a side benefit is that individuals at least have the option of topping up what the government will pay.
Both premium support plans and ObamaCare reduce the amount the government pays toward Medicare each year. The difference, however, is that under premium support you can buy more generous coverage with your own money; under ObamaCare’s Medicare program you effectively can’t. The reader can judge which one looks more like rationing.