January 23, 2014
Take a look at Medicare.
program, created during the maelstrom of arrogance and ignorance that was
the Great Society,
covers more than 50 million Americans. Tens of millions will be added as Baby
Boomers gradually attain eligibility. Funded by taxes and “premiums,” in 2012, Medicare
spent $574 billion. It gobbles up 3.6 percent of gross domestic product, and will
probably seize 5.6 percent of the nation’s output by 2035.
running out of money. The “Federal Hospital Insurance and Federal Supplementary
Medical Insurance Trust Funds” have an infinite-horizon solvency gap of $43
trillion. (Using more “plausible assumptions,” economists John C. Goodman
and Laurence J. Kotlikoff wrote in The
Wall Street Journal last summer, “the long-term shortfall is more than
$100 trillion.”) A problem for future generations? The earliest crisis point arrives
when most of us will still be around. According to the latest
report from Medicare’s trustees, Part
A’s “projected depletion date … is 2026, at which time cumulative expenditures
would have exceeded cumulative tax revenues by enough to equal the initial fund
assets accumulated with interest.” In other words, in a dozen years, some
decisions will need to be made.
bypass, or the F-35?
Surgery for Uncle Bill’s COPD, or farm subsidies?
Great-granddad’s expensive and risky hip replacement, or a new toy for NASA?
indeed, but moonbat wonks have good news for Medicare worrywarts: Obamacare
will save the program.
No. That’s not
The pace of America’s
runaway healthcare demand has slowed. Since
2008, the annual rates of increase have been several percentage points below
the historical average. Liberals have been quick to cite the “Patient
Protection and Affordable Care Act.” Since the Congressional Budget Office’s
2010 estimate, The
Atlantic’s Derek Thompson gushed,
“projected Medicare spending between 2013 and 2020 has fallen by just over $1
trillion.” The White House boasts that Obamacare’s “Medicare reforms are likely
to reduce health care spending and improve quality system-wide.”
Charles P. Blahous has a
different perspective -- one grounded in data, not ideology. The scholar worked
for George W. Bush, but don’t hold that against him. He’s also a trustee for federal “entitlements,”
and in an
analysis for George Mason University’s Mercatus Center, avers that “the
recent deceleration in national health care cost growth does not translate into
a significant probability that substantial further legislative changes to
correct Medicare finances can be avoided. To the contrary, such legislated
corrections are overwhelmingly likely to be required under almost any realistic
that since no one has been able to adequately explain the weakening in America’s healthcare
shopping spree, there’s no reason to expect that it will continue. Theories
abound, but Occam’s Razor
counsels that the moderation “coincided with a recession-induced slowdown in
many other economic factors including economic output, general price inflation,
and personal income growth.” So a return to large, annual increases following a
robust recovery is hardly out of the question. Besides, even if lower rates are
maintained, “well before” Obamacare squeaked through Congress, Medicare’s
trustees “assumed … that national health expenditure growth would eventually
decelerate to converge with broader economic growth trends.”
for doubt is that Obamacare’s Medicare-specific reforms “have yet to take
effect.” What’s more, several of the marquee measures have drawn withering fire.
As Blahous notes in an article in the current issue of Hoover Digest, there is “strong bipartisan opposition” to the Independent
Payment Advisory Board, the entity “charged with implementing policies to
hold down Medicare costs with minimal congressional interference.”
adjustments are central to Obamacare, with the goal of limiting increases to the
rate of “private nonfarm multifactor
productivity.” Blahous is skeptical: “These aggressive annual reductions … remain
controversial, and there is significant disagreement within the expert
community about how the medical and political systems will respond to them.
Even under the assumption that they are successfully implemented, concerns have
been raised about the proceeds of these savings being spent on an ambitious new
federal health entitlement enacted under other provisions of [Obamacare],
instead of being kept available to improve the federal government’s ability to
paper and it becomes obvious that proponents of the Obamacare-as-Medicare-solution
hypothesis are either clueless or dishonest. The administration and its defenders
deserve credit for creativity, though. It’s customary for leftists to peddle
tax hikes on “the rich” as the answer to the nation’s looming
unfunded-liabilities catastrophe. They’ve come up with something different this
time. But it’s just as specious.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
# # # # #