Health Care for the Poor

Health Care for the Poor

Republicans would also blow up the Medicaid program, which gives health care to more than 50 million Americans, mostly poor and disabled. He would save $771 million over the next 10 years by cutting Medicaid and sending it as a block grant to states, which would be given new flexibility on how to spend the money. Some may find creative savings, but many—especially those under GOP control—are likely to cut benefits.

Medicare and Medicaid

Republicans are being called courageous for taking on Medicare and Medicaid, this plan punts on perhaps the most electrified political rail of all: Social Security. That program is still solvent, but as millions of baby boomers retire, it's going to start running big deficits. Republicans have talked before about reforming Social Se­curity, but this latest plan simply calls for bipartisan action down the road.

Republicans  plan won't become law in anything like its current form. As long as Democrats control the Senate—at least.

The theory behind Republicans  health plan is that if individuals have to pay for their health care, they will shop carefully and drive down costs. But health is an unusual economic good and is unlikely to follow the usual market pattern. (Look at higher education: consumers pay for a large share of the total, and costs still rise at three times inflation every year.) In health care, a huge part of the expense relates to a small percentage of sick patients and to the last year of life (and those two categories over­lap).

Eighty-five percent of Medicare costs are generated by just 25% of pa­tients. Even in the most conservative health care plan, the health savings account, people buy catastrophic insurance. Well, that sick 25% of the patient population would have catastrophic insurance, which would still explode the Medicare Budget.