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After the 2012 Election, Is a Return to Sanity Possible?

Well, political junkies, only five weeks of the 2012 presidential campaign remain. But, don't despair. You have four years and five weeks until the end of the 2016 presidential campaign, which will almost surely start the day after the 2012 campaign ends. If, as now seems likely, President Obama wins four more years and Republicans retain control of the House, you will be exposed to four more years of Republican efforts to make a Democratic president fail, just like the last two. And, misguided fans of divided government, you will have your way—the election will not have changed a thing.

But, wait! Maybe, just maybe, enough representatives and senators will conclude that elections do, as the pundits say, have consequences. Republican leaders just might recognize that the Affordable Care Act is, and will remain, the law of the land, that closing the deficit while retaining government services Americans demand must include tax increases, and that trying to privatize Social Security and Medicare is a losing strategy. Democrats might recognize that deficits in Social Security and Medicare sap public confidence in those programs and keep them fair game for political attacks, and that if even one of those attacks succeeds, the proudest achievements of the Democratic party would be damaged or lost. Democrats might accept program cuts they don't really like but that will lower the political heat surrounding both programs. It is just conceivable that the ‘compromise virus' might infect leaders of both parties and permit needed legislation to reach the president's desk for signature.

Impossible, you may say. But let's dream. And let's dream about legislation that in a saner political world than ours seems to be should appeal to both parties. Here are some changes to Medicare, Social Security, and the Affordable Care Act that members of both parties could vote for if they were willing to focus on principles they claim to care about.

First, beef up Medicare administration. Supporters brag how little Medicare spends on administration. But spending so little is, in this case, false economy. Hiring fewer government employees can actually cost money. For each additional dollar we spend on Medicare auditors and investigators, studies show that we will save several dollars from reduced fraud. Spending a bit more on administration will also save money. When Medicare approves a new procedure for particular types of cases, a larger number of administrators could make sure that Medicare does not pay for use of those procedures in cases for which use was not approved because safety and efficacy were unproven. Medicare enrollees could still have those services—if they are willing to pay for the services themselves.

Second, add to Medicare a key protection of the Affordable Care Act—insurance against catastrophic illnesses. Pay for this added benefit with somewhat higher premiums on upper income beneficiaries. If protection against catastrophic drug costs is a good idea, then why not for the rest of Medicare? President George W. Bush supported protections against catastrophic expenses as part of his Medicare drug benefit. Members of both parties should endorse this change because it would spare many people the added cost and complexity of buying supplemental coverage.

Third, beef up the Affordable Care Act's penalty on Cadillac health insurance plans. Ronald Reagan was the first president to call for limits on tax breaks for very expensive employer-sponsored health insurance. Although this reform has Republican paternity, no Republican supported those Democrats who won inclusion of these penalties in the Affordable Care Act. Both parties should agree to strengthen them.

Fourth, the projected long-term deficit dogging Social Security lends credence to the bogus claim that the program is unsustainable. Small tax increases or benefit cuts would assure solvency indefinitely. That said, the case for benefit cuts is weak. Social Security benefits are actually lower in relation to earnings than they have been for decades. They are downright parsimonious compared with those of most other developed countries—40 percent lower for average earners than the mean of the sixteen other richest members of the Organization for Economic Cooperation and Development. Furthermore, benefits are tied to earnings and U.S. earnings have either fallen or barely increased for decades, other than for very high earners. High earners have also been the principal beneficiaries of increased longevity. Life-expectancy among those with little education and, accordingly, with low earnings has actually fallen for the last two decades.

These trends suggest that the bulk of the work in closing Social Security's projected deficit should be carried by taxing more earnings and at a slightly higher rate, rather than by cutting benefits. But any benefit cuts should spare those with low or moderate earnings and focus on those with comparatively high earnings. Given their longer life-expectancies and the general downward age-adjusted trend in the incidence of impairments, benefits should be restructured to encourage those with comparatively high earnings to retire later than they now do.

Finally, if President Obama wins reelection, the Affordable Care Act will not be repealed. It will be implemented. It is inevitable that problems will emerge in the implementation of a law as complicated and far reaching as this one. In a politically sane world members of Congress would work out compromises on these and other issues. Members of both parties would give a little, to get a little, thereby advancing principles each party espouses.

Is it fantasy to hope that in the post-election United States of 2013 enough members of both parties will put solving problems for the American people ahead of positioning themselves for the elections of 2016?