You have heard this before, every wealthy country in the world provides health care to all its citizens except the United States. If $9 trillion in debt over the next ten years sounds like a wealthy country, you will also buy the idea that the couple who purchased a McMansion with no down payment and then furnished two of the ten rooms with used lawn furniture is wealthy as well.
You have also heard that controlling health care costs is essential to bringing down the federal deficit, that’s federal deficit remember as in:
“Beyond 2013, deficits will remain stubbornly high in large part because of spending on Medicare, Medicaid and Social Security. That isn’t tied to the recession, the CBO said: it will simply rise as baby boomers age.” As quoted in the August 26, WSJ.
To accomplish health care reform the plan is for $622 billion in cuts to Medicare and Medicaid. Part of that is lowering payments to providers (think cost shifting) and part of that is cutting government payments for Medicare Advantage Plans, those are the private options available to Medicare beneficiaries and they operate as an HMO or POS, considerably reducing or in some cases eliminating out of pocket costs. Medicare out of pocket costs are an often overlooked issue.
Here is what the Medicare website says about Medicare Advantage Plans:
“Medicare Health Plans (like HMOs and PPOs)
These plans are approved by Medicare and run by private companies. When you join one of these plans, you are still in Medicare. Some of these plans require referrals to see specialists. They provide all of your Part A (hospital) and Part B (medical) coverage. They generally offer extra benefits, and many include prescription drug coverage. These plans often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to get covered services. In many cases, your costs for services can be lower than in Original Medicare, but it is important to check with the plan because the costs for services will vary.”
Cutting payments to Medicare Advnatage Plans most likely means higher costs for Medicare beneficiares in those options.
So here is the point, costs are to come from Medicare and spent to expand health care for younger Americans.
That is not a net gain for the budget, it’s neutral, and so it does nothing to reduce total deficits. The hope is that by adding all Americans, many subsidized, to the health insurance roles somehow costs will be lowered for the government. At the same time costs for Medicare beneficiaries, all the people who currently have health insurance and employers who provide coverage to workers will rise (not counting the possible various taxes and penalties that are part of proposed legislation). We are told that other provisions in the law will lower the cost of care, things like implementing the results of comparative effectiveness studies, but even if that is accomplished it will not happen within the next ten years.
If by some miracle we do lower the base for health care costs, there is nothing being done that will lower the rate of increase going forward, unless of course, you believe that paying fully for health and wellness programs and preventive services will lower costs, but again, not in the next ten years.
While we are reducing the cost of health care to the federal government, proposals also include elimination of the Medicare Part D donut hole, adding long term care coverage as a default mandate (paid for by Americans, but adding a new bureaucracy) and virtually unlimited health benefits, nice to do stuff if you are really rich.
All of the above simply does not add up to controlling our debt. America may be a rich country, just like a friend of mine who has two mega homes and two Mercedes, but no money to retire is rich. While we control health care costs for Americans we tax them to pay off our growing debts…are you going to be better off?
Let us not forget that controlling health care costs should it ever be accomplished means that someone will be paid less, that someone is doctors, hospitals, insurance companies, drug makers, medical equipment manufacturers. The health care industry is the fastest growing segment of the economy (behind government I suspect) and that sector is adding jobs.
While striving for efficient quality health care is a valid and critical goal, we should not ignore the consequences of approaching that goal by merely waiving a political wand and taking from Peter to pay Paul.