Analysis: "Mediscare" a roadblock to long-term deficit cuts

Reuters News
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Posted: May 26, 2011 4:13 PM
Analysis: "Mediscare" a roadblock to long-term deficit cuts

By Tim Reid

WASHINGTON (Reuters) - A Democratic victory in a reliably Republican House district on Tuesday has lawmakers running scared from reforming Medicare, greatly reducing chances of a comprehensive deal to cut America's long-term deficit.

Rarely in recent times has a single, off-year special election -- like the one in upstate New York -- triggered such nationwide political tremors, or had such negative implications for efforts to bring America's federal debt under control.

Democrat Kathy Hochul won in a solidly Republican district after hammering her opponent for backing a Republican plan in the House of Representatives to scale back Medicare costs -- a government program that is the biggest single driver of the U.S. deficit, but which most voters want left untouched.

Without a sincere effort to curb the growth of Medicare, which provides health insurance to 47 million elderly and disabled Americans, the program will run short of money within 13 years.

Left unreformed, Medicare, along with Social Security and Medicaid -- the federal health program for the poor -- will devour 100 per cent of all tax revenues by 2047, according to the non-partisan Government Accountability Office.

Republicans recaptured the House in 2010 in part by accusing Democrats of wanting to slash Medicare and interfere with the doctor-patient relationship under President Barack Obama's healthcare reforms, derided as "Obamacare".

Now Democrats believe the political tables have been turned. At issue is a proposal put forward in April by House Budget Committee Chairman Paul Ryan which would turn Medicare into a scheme where seniors receive government vouchers to help them pay for private insurance.

The independent Congressional Budget Office estimates that Ryan's budget would eventually double out-of-pocket Medicare expenses for seniors.

Polls show that while voters want action to bring down the deficit, set to reach $1.4 trillion this year, they overwhelmingly oppose any changes to Medicare. Already Tim Pawlenty and Mitt Romney, leading contenders for the Republican presidential nomination, have backed away from Ryan's plan.

"KICKING THE CAN DOWN THE ROAD"

"The Republican budget is a toxic political liability for the GOP," Democratic Senator Patty Murray said. Tuesday's vote "will be remembered as a defining moment in the next election."

With Democrats now having every political incentive not to tackle Medicare costs and with many Republicans keen to avoid the issue, analysts said Tuesday's election was also a defining moment -- and not a positive one -- for the long-term deficit.

With Medicare the largest and one of the fastest growing budget components, significant deficit reduction simply cannot be achieved without some savings from the program.

"It's surprising what a ripple effect one special election can have," David Gergen, a political analyst and adviser to four U.S. presidents, told Reuters.

"The New York election makes it harder to reach a comprehensive agreement on deficit reduction before the 2012 election -- and what happens after 2012 is so uncertain. This makes it more likely that they could kick the can down the road, into 2013 or 2014."

Recent elections have shown what a politically explosive issue Medicare is -- and the party that tries to reform it does so at its peril.

In 2010, Republicans accused Democrats of wanting "death panels" for seniors under their Medicare proposals, tactics that helped win big gains in November's mid-term elections.

This week, one liberal non-profit group, in an attack on Ryan's plan, released an advertisement showing an elderly woman being thrown off a cliff from her wheelchair -- an image likely to be reprised by Democrats as the 2012 vote draws nearer.

Republicans are now branding such efforts as "Mediscare" tactics.

Ryan, speaking at a financial summit in Washington, said Obama and Democrats had decided to "shamelessly distort and demagogue Medicare," and warned that without reform, "it's going to go bankrupt and we'll go into a debt crisis."

Former president Bill Clinton, who waited until being re-elected to a second term before tackling welfare reform, warned Democrats against using Medicare for "short-term political gain."

Now freed from the political constraints of office, Clinton bluntly told fellow Democrats: "We've got to deal with these things. You cannot have healthcare devour the economy."

(Reporting by Tim Reid, Editing by Ross Colvin and David Lawder)