Don’t Soak the Rich Too Much
Robert Waldmann is very upset that I said a program of lower Medicare benefits for the rich, higher Social Security taxes for the rich, higher income taxes for the rich, higher corporate income tax, and lower Medicare payment rates is “not the soundest policy agenda in the world” and says that he thinks it in fact “is the soundest policy agenda in the world.
In terms of optimal policy, I think defense cuts and carbon pricing need to be on the table. In terms of problems with this agenda, I worry that if you simultaneously make Medicare patients a worse deal for doctors and make Medicare a worse deal for rich people that you’ll see a spiral in which better doctors stop seeing Medicare patients, richer seniors stop using Medicare, and the system threatens to unravel. Since Medicare payment rates are lower than private sector payment rates even if SGR “patches” keep passing, I think the winning strategy for reducing payments is to implement a public option or a Medicare buy-in. We should also be doing the Affordable Care Act’s payment reform stuff more aggressively.