morning on Medicare. I think he gave us a window into what is coming.
He outlined a number of measures that would help to put Medicare on
The federal government will spent north of $1 trillion in 2011 for
health care (7% of total GDP!). Half of that will go to Medicare. That’s
a bad result. But it is nothing compared to what will happen in the
coming decade. The cost of all medical treatment will rise substantially
above Mr. Bernanke’s measurement of inflation and there will be many
more people on the Medicare line due to the rapidly aging population. So
what does Doug suggest?
Cut payments to Medicare providers for services they provide.
There have already been cuts made. But they are temporary. Elmendorf
wants more. This makes sense. Cutting payments to Dr’s, hospitals and
service providers like nursing homes would make a big difference on the
financial side. It would also make a big difference to Granny in that
nursing home. It’s worth noting that Elmendorf doesn’t think this is
likely to happen:
Whether the reductions will be sustained over a long period of time remains to be seen.
Another suggestion is to extend the eligibility schedule for Medicare from 65 to 67.
I am quite certain this will happen. The only question is how soon it
will happen. Some smart fellow will do an analysis on the proposal and
conclude “It will save us X dollars, but Y people will die as a result”. The X in this calculation will be big. The Y will also be big.
This recommendation will strike a dagger at the Administration and all those Dems who supported Obamacare:
Reverse the expansion of Medicaid and the subsidies for purchasing insurance that were enacted in last year’s legislation.
The suggestion is that we will have Universal Health Care “Lite”. It also implies that Obamacare comes up for some redrafting. If they start messing with this it will be the death of it. (Politically this would suit the Republicans and Tea Party set-ergo look for it to happen)
A separate suggestion is to treat employer contributions to health insurance as income and tax it accordingly. This is just a tax increase for workers. It will go over like a lead balloon.
But we need to remember that this concept is already part of the
current law. It was part of the Obamacare stealth tax increases. These
tax increase are scheduled to go into effect in 2018. This could happen
much sooner according to Elmendorf:
Last year’s legislation changed the tax treatment of employer-sponsored health insurance, but only in 2018 and beyond. That provision could be accelerated and strengthened.
The most significant recommendation (to me) is the suggestion that
Medicare will not cover new treatments under some circumstances. This is
the Death Panel concept of rationing health care that everyone has been taking about.
Medicare pays the costs of nearly any medical treatment or procedure
that a doctor recommends. An alternative would be for Medicare to pay only the cost of existing ways of dealing with a specific health problem
I was surprised that Elmendorf made it clear that if someone on Medicare
had the money to pay for the better, newer treatments they could do it.
But they had to shell out of their pocket. In this plan, what happens to those who don’t have that money? Easy, they die or get inferior treatment.
Under such an approach, patients would be able to use their own money to pay for the more-expensive care, but the federal government would not pay more
Elmendorf acknowledges the difficulty in making the choices of which treatments are covered and which are not:
would be an immense challenge to formally classify treatments and
procedures into sets that address the same health problems and to
evaluate whether some treatments and procedures are better for some or
Yes Doug, it will be an “immense challenge” to come up with that list. But that list is coming. And again, as a result of the list, some will die.
We have to make hard choices. Ones that will result in suboptimal health
care and yes, premature death. It’s good that the CBO put this on the
table. It’s still not easy to read. Anyone who says that America is such
a wealthy country ought to look at it. We’re not as rich as we’d like to think we are.