Fix Health Care Policy

Why Medicare Must Be Reformed

Medicare is shaping up to be a deciding factor in the debate over our nation’s future.

As Heritage’s Bob Moffit and Alyene Senger explain in a recent paper, “Why Traditional Medicare Must (and Will) Be Reformed,” the status quo in Medicare is unsustainable and unacceptable due to the program’s structural and financing flaws.

Here are a few reasons Medicare needs to be reformed:

• Medicare spending is growing faster than any other federal program. Medicare spending has reached unsustainable levels and is contributing to our budget deficits more quickly than any other program. Further, over the long term, Medicare has made $37 trillion worth of benefit promises to future seniors that are simply not funded. The hospital insurance trust fund is projected to be insolvent by 2024. 
• While seniors have paid for their benefits, their payments do not cover the costs of the program. In 2011, approximately 88 percent of Medicare’s spending was funded by taxpayers. A large part of the problem is the erroneous belief that seniors have fully paid for their benefits. In fact, Moffit and Senger explain that, “on average, a one-earner couple who retired at age 65 in 2011 and earned an average wage will have paid just $60,000 into the program but will receive an estimated $357,000 worth of benefits.”
• Medicare enrollment is set to skyrocket. Baby boomers have already begun to retire. At the current rate of retirement, the program will enroll 10,000 beneficiaries into Medicare every day from 2011 to 2030. Moffit and Senger explain that “enrollment is expected to jump from 48 million beneficiaries in 2011 to 81 million by 2030.” This is coupled with a 50 percent decrease in the proportion of workers contributing to the hospital insurance trust fund over the same period. The outlook: more beneficiaries and fewer workers paying taxes to support them.

Read the rest on The Foundry…

Tags: coverage, graphs, Medicare, myths, ObamaCare, payments, pictures, spending

Presidential Debate Prep: Understanding Obamacare’s $716 Billion in Cuts to Medicare

As the Medicare debate intensifies, there still seems to be popular confusion regarding the $716 billion in “savings” from Obamacare’s Medicare payment cuts. Let us end the confusion.

Which Parts of Medicare Will Be Cut?

In Obamacare, the payment cuts are across-the-board cuts (modifications of Medicare’s complex payment formulas) made throughout the bulk of the Medicare program. According to the nonpartisan Congressional Budget Office (CBO), these cuts will decrease Medicare spending by an estimated $716 billion between 2013 and 2022.

The money is cut from hospital services, Medicare Advantage, skilled nursing services, hospice services, and other Medicare services. To be clear, the cuts do not target individual institutions or medical organizations suspected of waste, fraud, or abuse. (continues below chart)

Read the rest on The Foundry…

Tags: $716 billion, Congressional Budget Office, Medicare, Medicare Advantage cuts, presidential debate, spending

For Patients in Both Medicare and Medicaid, Care Is Inefficient and Costly

The Wall Street Journal recently reported on bureaucratic barriers for patients covered by both Medicare and Medicaid. These two programs serve the elderly and the poor, respectively, and people who fall into both categories—the “dual-eligibles”—should get better-quality care with more efficient taxpayer spending.

According to the WSJ, an estimated 9.7 million Americans fall under the dually eligible criteria. They account for 16 percent of the Medicare population but 27 percent of Medicare spending, and 15 percent of Medicaid’s population but 39 percent of its spending. More efficient financing for this group is essential to reining in spending on both entitlement programs.  (Read the rest on The Foundry…)

Tags: bureaucratic barriers, financing, Medicaid, Medicare, spending

New Senate Health Bill: Exacerbating Federal Fiscal Insanity

Senator Reid seems comfortable with clandestine negotiations in order to ensure passage of any type of health reform. This course, aside from being politically dubious and whimsical, is fiscally reckless, and with its passage, will continue to add to the debt that will straddle future generations with a significant amount of fiscal stress.

As with the previous health reform bills, the assumptions and parameters the Congressional Budget Office must use will likely score this new bill as deficit neutral. Yet, the price tag for the overall bill will not changed, and will include massive expansions of Medicare and Medicaid making the long-term fiscal outlook in the US dismal at best.

Now, Congress wants to also raise the debt limit to finance more spending—including any type of health reform. Existing healthcare entitlement spending is already on an unsustainable course, however, and the intergenerational fiscal imbalance will only worsen, where future generations will face substantially higher net lifetime tax rates, permanently lower federal government purchases and transfers, or some combination of the two policy changes.

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Tags: debt, economy, health insurance, new taxes, ObamaCare, Sen. Harry Reid, spending

Honest Medicare Budgeting in Health Care Reform

The health care reform wallowing through Congress includes a ploy reminiscent of the “liar loans” prominent during the recent real estate bubble before its collapse. The bill cuts imaginary Medicare spending and uses the funds for real spending elsewhere. Senator Judd Gregg (R-NH) has blown the whistle on this charade. Health care reformers are not amused.

“Liar loans” describe so-called no documentation mortgage loans used to finance home purchases in the worst of the real estate bubble. In qualifying for loans, borrowers were on their honor not to misstate their income, liabilities, and assets. Many proved dishonorable, claiming income they didn’t earn. Few of the homes purchases with these loans escaped foreclosure.

The health care reform bill proposes to pay for new entitlement spending by cutting Medicare. The trouble, of course, is that much of Medicare spending is already unfunded and unaffordable. Even assuming Congress defies steep odds and actually reduces future programmed spending, the Medicare money is not really there to be cut, so it’s not there to be redirected, either — another case of the missing income.

Imagine if you committed to spend $1,000 more than you earned every year. Imagine then you found something new to buy, at a price tag of $100. Cutting back your original spending to $900 and then adding the new item for $100 is hardly an act of fiscal prudence.

Senator Gregg as Ranking Member of the Senate Budget Committee has offered an amendment in his role as guardian of budget common sense. His amendment simply says that Medicare savings can only be used for Medicare, and he achieves this result by requiring that the bill be budget neutral exclusive of Medicare savings.

The Gregg amendment corrects only one of the many flaws in the bill, but it is an important step. It says that the bill has to be paid for with real money, not liar loans. If Congress adhered to this kind of honest budgeting more often, it would likely be spared some painful votes like the pending hike in the national debt limit.

Tags: health care reformers, liar loans, Medicare, spending

Yes, $2.6 Trillion! A Closer Look at the Full 10 Years of Spending in the House Health Bill

House Speaker Nancy Pelosi and the House Democratic leadership are frantically trying to find enough votes to pass their giant 2,032 page health care legislation this weekend. But before Speaker Pelosi and liberals in Congress pass their big bill, the American taxpayers should be fully aware of the full price tag of this monster.

As Heritage analysts noted earlier in the week, the Congressional Budget Office released its preliminary score of the bill (H.R. 3962) but too many in the media have not been reporting its true cost. The true cost is not the net spending on only the coverage related provisions ($897 billion) but rather the total gross spending for the coverage provisions ($1.05 trillion) as well as any additional spending in the bill (approximately $217 billion). That would raise the plan’s price tag to about $1.5 trillion when including the roughly $210 billion cost of the “doc fix” is included. The “doc fix” refers to the undoing of the flawed Medicare payment update formula, which Congress created but has routinely stopped from being enforced. Under current law, that formula would result in a 20 percent reduction in doctors’ pay under the Medicare program. (more…)

Tags: debt, deficit, Medicare, Nancy Pelosi, Obama Health Care Plan, spending, tax, trillion