Thursday, September 10, 2009

Medicare cost savings

The President stated again last night that half of his 900 billion dollar plan would be covered by increased efficiency in Medicare, without denying procedures or dropping coverage. That's 450 billion spread out over 10 years, so it's roughly 10% of the total Medicare budget, which I don't think in enough to bring Medicare back into solvency. Given that we do have millions of seniors depending on Medicare and that practically every economic model has it going broke in the medium term, I have to wonder why, since Democrats have ideas for such huge savings without cuts in benefits, we haven't already implemented them. I have a very hard time believing that Republicans wouldn't go along with non-benefit reducing cuts in Medicare spending if they were separated from a massive new regulatory system for private health care.

Leaving that, aside, though, I have a different proposal. In last nights speech Obama stated that the bill would be deficit neutral and he would go so far as to make a provision in the bill that if spending cuts didn't materialize at their expected rate then further spending cuts would automatically be mandated. This sounds great, pass a bill that is deficit neutral and even if everyone is wrong (as often happens) about how much reduction you actually have then make further cuts. But I don't believe that's what he meant. Smart money is, I think, on the interpretation that he's going to pass his existing "reforms" which the CBO says will save pretty much nothing, and if they don't save the amount he claims (and practically no economist agrees with) then Congress will have to make the hard choices of cutting unspecified, but now enacted, programs. That's an unacceptable gimmick. Which is easier in the future, cutting medical services to save money, or changing the bill so it no longer promises those cuts?

I have a counter proposal. If he is really that confident his Medicare cuts will work, why not stake the bill on it instead of forcing spending cuts that I don't believe will ever happen? The bills currently published don't take effect until 2013 anyway. Make a bill such that the Medicare spending cuts happen now and if Medicare costs fall $225 billion below current CBO (or HHS) estimates at the 5 year mark or $450 billion below estimates at the 10 year mark then the rest of the program to have government dictate private citizens' health care starts then. This completely removes my (and many Republicans') argument that his Medicare cuts won't work.

I'll note I still think the massive government intrusion into determining what health care I must pay for (even if I have no chance of ever receiving it) is a bad idea and I don't think we should even be considering cost savings in Medicare unless it's cost savings below that which makes Medicare solvent in the long term (which 450 billion doesn't begin to approach), but I'm so confident he can't cut 450 billion without affecting services that I'll promise not to stand in the way of a bill that is predicated on it.

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