The unfunded liability in Medicare, the trustees tell us, is $34 trillion over the next 75 years. Looking indefinitely into the future, the unfunded liability is $43 trillion — almost three times the size of today’s economy. Based on more plausible assumptions, such as those reflected in the “alternative” scenario for Medicare produced by the Congressional Budget Office in June 2012, the long-term shortfall is more than $100 trillion.
From an editorial by Larry Kotlikoff and me in the Wall Street Journal today.
Douglas Holtz-Eakin, former director of the Congressional Budget Office and chief domestic policy adviser to John McCain’s presidential campaign, created quite a stir last week when he urged states to set up their own health insurance exchanges under ObamaCare. This is from The Hill:
The healthcare law envisions each state setting up its own exchange — a sort of Expedia or Orbitz for health insurance — but authorizes a federally run fallback in states that don’t act on their own…But Republican governors have rejected state-based exchanges, saying they won’t play any part in helping to implement a law they oppose.
Operating a state-based exchange gives the states the power to make key decisions about their marketplace, such as whether to negotiate directly with insurance plans or open the market up to any plan that meets certain minimum criteria. States could also decide whether to preserve or eliminate the individual market outside of their exchanges, or require non-exchange plans to meet the same criteria as exchange plans.
Punting those decisions to the federal government is “choosing a slippery slope toward precisely what liberal Democrats want: a federally controlled healthcare system that would be the first step toward European-style, single-payer healthcare,” Holtz-Eakin wrote.
This graph is from a new study from the Congressional Budget Office:
Here is Neil Irwin at the Ezra Klein blog:
This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession. Growth has been 9 percent below what was seen in past recoveries on average in its first three years…The new CBO report claims that two-thirds of the underperformance of the economy over the past three years compared to a typical recovery is due to a slower rate of growth in potential GDP. Only one-third, in this analysis, is due to factors related to this recession.
When the [Affordable Care Act] passed in June 2010, the Congressional Budget Office projected the budget cost between fiscal 2012 and fiscal 2019 to be $462 billion. By June 2012, the cost for these same years had jumped to $574 billion, an increase of nearly 25 percent.
Entire report from the American Action Network.
- A paper in Health Affairs (subscription required) released last week found that even “aggressive” improvements in performance measures by accountable care organizations caring for diabetic patients would result in minimal cost savings — and “after the costs of performance improvement, such as additional tests or visits, are accounted for,” those minimal cost savings could become cost increases.
- A recent analysis of North Carolina’s patient-centered medical home initiative found the program yielded no budgetary savings, contrary to expectations.
- More broadly, the Congressional Budget Office noted earlier this year in a major report that most Medicare demonstration programs over the past several decades have NOT saved money.
Source: Chris Jacobs.
Here is the scorecard on Obama’s fiscal promises, according to the CBO: the deficit in 2008 was 0.5 trillion dollars. Federal outlays were 2.98 trillion dollars. Since then, the U.S. government has run deficits of 1.4, 1.3, 1.3, and a projected 1.17 trillion dollars during these last four years…with outlays of 3.5, 3.5, 3.6 and a projected 3.4 trillion dollars (through 11 months of the 2012 fiscal year)…
Instead of cutting the deficit in half, Obama has tripled it. Instead of controlling spending, he’s raised outlays by half a trillion dollars a year, which will get much bigger when the health care law takes effect. Instead of a temporary stimulus to bridge the nation back to full GDP, we have a permanently stimulated federal government and zero recovery.
It is entirely understandable that the deficit was not fixed in the first year that Obama was in the White House, the second year, the third year, and even the fourth year. What is not understandable is the absence of any coherent long-term plan, partisan or bi-partisan, to address the issue. What America got instead was another blue-ribbon commission (Simpson-Bowles) that was ignored before the ink on its final report was dry.
Entire post by Tim Kane in the Balance blog.
[A]ccording to the Congressional Budget Office, for every $500 the law spends on preventive services and prescription drugs, it cuts the rest of Medicare by $7,385. That’s a cut-to-spending ratio of nearly 15 to 1.
The Congressional Budget Office recently published new estimates on how the Patient Protection and Affordable Care Act (ACA) would cut about $716 billion from Medicare over a 10-year period (2013 to 2022). This included $415 billion from Fee-for-Service (FFS) Medicare and $156 billion from Medicare Advantage (MA) plans — in addition to other cost-cutting provisions. The cuts work out to about $15,000 fewer dollars per enrollee.
Robert Book and Michael Ramlet have updated their analysis of the impact of Medicare cuts by state and county. One startling factoid: three states that are havens for seniors — Texas, California and Florida — stand to lose a combined $148 billion. Two counties in Florida — Broward and Dade County — stand to lose nearly $10 billion combined. Two counties in Texas — Harris County (Houston-area) and Dallas County — stand to lose nearly $11 billion combined.
With all the talking heads out there defending the indefensible (see the previous post), let me stop to praise Dylan Matthews at the Ezra Klein blog for calling it straight. Here is a sample of his analysis of a Mitt Romney ad:
Obama is raiding $716 billion from Medicare – This one’s true. The most recent CBO analysis of the Affordable Care Act, released last month, estimated the 10-year Medicare cuts in the bill at $740 billion, so if anything the ad’s number is low.