Tag Archives: Medicare

CBO 2011 Long-Term Budget Outlook – Flatline or Out of Control after 2015?

The nation’s budget outlook is daunting.

Without significant policy changes, an aging population and rising per capita health care costs will lead to surging federal debt, according to Congressional Budget Office’s (CBO) latest Long-Term Budget Outlook.

If revenues remain at their historical average share of gross domestic product (GDP), such spending growth would cause federal debt to grow to unsustainable levels.

CBO Charter 2011 Long-term budget outlook

Options – If policymakers are to put the federal government on a sustainable budgetary path:

  • Revenues will need to increase substantially as a percentage of GDP; or
  • Spending will need to decrease significantly from projected levels;
  • there will need to be some combination of those two approaches.

In keeping with CBO’s mandate to provide objective, impartial analysis, its report makes no recommendations.

The CBO however does not talk around what it believes to be some major concerns and/or aspects of our fiscal situation that needs to be taking into consideration.

Some highlights from the report:

  • At the end of 2008, federal debt equaled 40 percent of GDP (a little above the 40-year average of 37 percent). By the end of 2011, debt will reach roughly 70 percent of GDP—the highest percentage since shortly after World War II.
  • The sharp rise in debt is partly from lower tax revenues and higher federal spending related to the recent severe recession—however, growing debt is also due to an imbalance between spending and revenues that predated the recession.
  • The budget outlook for the coming decade and beyond is daunting with the retirement of the baby-boom generation bringing a significant and sustained increase in costs from Social Security, Medicare, and Medicaid.
  • The most positive outlook
    If there is no major changes in law — the Extended-Baseline Scenario — activities such as national defense and a wide variety of domestic programs—would decline to the lowest percentage of GDP since before World War II. Debt would continue to rise however due to the major mandatory health care programs, Social Security, and interest on federal debt. Federal debt held by the public would grow from an estimated 69 percent of GDP in 2011 to 84 percent by 2035.
  • Bleak and Sudden Crisis
    The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur. These include 2001’s tax cuts being extended; the reach of the alternative minimum tax (AMT) restrained to stay close to its historical extent; Medicare’s payment rates for physicians staying at current levels (rather than declining by about a third, as under current law); and tax law changing so that revenues remain near an average of 18 percent of GDP. Under those policies, federal debt would grow much more rapidly than under the extended-baseline scenario. With debt held by the public exceeding 100 percent of GDP by 2021.The real danger in the CBO’s assessment: “… the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2023 and would approach 190 percent in 2035.”

Rising levels of debt also have other negative consequences that are not incorporated in those estimated effects on output:

“Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates. Such a crisis would confront policymakers with extremely difficult choices. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”

Read the CBO’s 2011 Long-Term Budget Outlook for yourself.

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RyanCare, ObamaCare, Red Ink and Ethical Dilemmas — Where have all of the adults gone?

Paul Ryan (R-WI) finds himself at the center of a firestorm.

RyanCare, or the Ryan Plan, represents a very significant society changing plan that is part of the Republicans’ partial repeal and replacement of ObamaCare.

In large part RyanCare focuses on reforming Medicare, although major and very significant changes have already been made to bolster Medicare’s future. The only way that RyanCare can be successful would be the repeal and replacement of major portions of ObamaCare, aka the Affordable Care Act (ACA).

I support the core ideas behind RyanCare — our nation faces major debt; Medicare is not only deeply in debt and unsustainable but to keep it functioning to serve those coming under its coverage over the next decade or two will require trillions of dollars —  but it will have to make its way on its own merits.

Selling Ryan Care will be tough. The mathematical problem aside, the larger question is whether RyanCare is ethical?

Is it ethical to create a system which effectively ends Medicare? Medicare came about because the good old days were not good for the aged and infirm. The good old days were actually very miserable.

>> I purposely do not say that RyanCare kills Medicare, although any number of both his supporters and detractors believe exactly that. You have to worry when supporters of a plan make repeated statements that reinforce your worst fears.

>> RyanCare and the basics of its coverage are not so different than ObamaCare per a comparison provided by the New England Journal of Medicine. The greatest difference is that short of catastrophic illness the RyanCare plans pushes unaffordable medical costs on the average (median and lower income) individual American. This leads to very credible charges that RyanCare effectively ends Medicare for those that need it the most and that probably could not get health coverage, or get affordable health coverage. The Congressional Budget Office (CBO) estimates that RyanCare will double out-of-pocket expenses, roughly equal to somewhere near $8,000-9,450 per year. RyanCare in 2022 would provide a premium subsidy/voucher for approximately $8,000 but this is to cover the government’s share of Medicare, not out-of-pocket expense — so please don’t confuse the two.

On the question of ethics, any attack or scaremongering against RyanCare also faces an ethical dilemma:  How can you support an approach to healthcare where the system will collapse soon enough due to its own overwhelming failure to be either properly funded or administered in such a way that Medicare is means tested and those that can pay greater costs actually do?

>> From the 2011 Medicare Trust Fund’s Board of Trustees report: “…the HI (hospital insurance) trust fund is now estimated to be exhausted in 2024, 5 years earlier than shown in last year’s report (2010), and the fund is not adequately financed over the next 10 years.”

>> The Medicare Trustees in their 2011 report also outlined Medicare’s future as dependence upon the Affordable Care Act (Obamacare) being successful: “The Affordable Care Act introduced important changes to the Medicare program that are designed to reduce costs, increase revenues, expand the scope of benefits, and encourage the development of new systems of health care delivery that will improve health outcomes and cost efficiency. The financial projections in this report indicate a need for additional steps to address Medicare’s remaining financial challenges. Consideration of further reforms should occur in the near future.”

Medicare 2011 Board of Trustees Report

Medicare 2011 Board of Trustees Report; red highlighting of items by Bill4DogCatcher.com

What I would like to see:

>> I would like to see some mature adult conversation. “The enemy isn’t conservatism. The enemy isn’t liberalism. The enemy is bullshit.” —Lars-Erik Nelson. Politifact notes that most partisan critics of the opposing view are often not only wrong, but they strongly mistate the other side’s actual position, or even their own position — this includes President Obama himself. Too many folks that should know better are just big fat flaming liars in this debate.

>> Universal availability of coverage. No preexisting condition discrimination. This doesn’t mean unlimited health care until the last breath. Rationing has always existed, whether by panel, policy or by income. Let’s not pretend otherwise. Conservative criticism of ObamaCare’s ‘death panels’ is probably much more exaggerated than the impact of RyanCare’s individual responsibility to fund more of your own care — with RyanCare’s level of personal responsibility being an approximate doubling of out-of-pocket expenses that come close to 35-40 percent of individual income for those at or below median income. Rationing of health care has and will always exist. Let’s acknowledge that rationing exists and decide upon what kind and how much of health care we will fund as a society.

>> We cannot fund everything, yet neither does our system encourage self-responsibility. Talk of self-responsibility is very irresponsible when it come to the aged and infirm that would live without the possibility of independent affordable coverage. The average net worth of Americans ages 44 and under is not even enough to pay for a heart attack + surgery + care. Older Americans have an average net worth of $181-232,000 but for most this includes the equity in their home. ‘Personal responsibility’ is a great campaign phrase but let’s not pretend that it is anything more … or not too much more than another way of saying ‘your problems are your problems, not mine’.

>> Let’s not talk about free markets but responsible markets. There hasn’t been a free market in health care since HMOs were first founded in the 1920s and Blue Cross Blue Shield expanded on that in the early 1930s. A responsible market would segment tests and procedures to reduce costs. For example, an annual physical consists usually of a battery of very standardized tests. Is there any reason that you couldn’t go to a pharmacy and get those same tests done? Doctors and hospitals need to stop hiding costs by providing itemized bills that represent actual charges — not charges plus subsidized costs averaged across items and procedures. A tooth brush or an aspirin should not cost $70-80 in a hospital stay, or you get charged for things that were never used. Let’s acknowledge the money game by insisting on responsible accounting that reveals the shell game that is going on.

About Paul Ryan and that firestorm — Republicans publicly trashed Obamacare in 2010 and turned the Medicare argument into Mediscare. Much of their criticism was with merit but the way they went about it was over the top, beyond misleading and played on emotion: we were supposedly on the verge of death panels and rationed care.

In 2012 the Republicans are offering death panels by income affordability and rationed care because few may be able to afford RyanCare. That will be the campaign theme of the Democrats — and much of their criticism will be with much merit. Yet they will predictably go over the top, be beyond misleading and play on emotion.

We know who decides most elections: those over the ages of 45. Mediscare worked in 2010 and it will work in 2012, just for the other party.

Seniors may well vote against the GOP. While the GOP works hard to assure them that they will be unaffected by RyanCare, American seniors are old enough to remember the good ol’days and that they weren’t.

I have concerns. I want change. I want responsible change. I want balanced budgets and I want to see a sense of ethics that balances individuals with the reality of the greater society that we live in. You affect my healthcare choices. I affect yours. So can we work this out?

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2012-2021 Federal Budget – GOP Aim: Cut $4 Trillion + Radical Changes to Medicare

From the Wall Street Journal:

“Republicans will present this week a 2012 budget proposal that would cut more than $4 trillion from federal spending projected over the next decade and transform the Medicare health program for the elderly, a move that will dramatically reshape the budget debate in Washington.”

“The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program’s soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016.”

Bill4DogCatcher sez: This article is full of important public policy items to think about. Surely most people will start running around with their hair on fire without first taking the time to read and to digest what  this policy would mean to most people. BTW – most of the policy recommendations were developed on a bipartisan basis over the last few years, although it is only now that these policy recommendations are getting the chance to be considered and to be voted upon.

Read entire article at http://online.wsj.com/article/SB10001424052748703806304576240751124518520.html

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“Pledge To America” Critiqued by the Concord Coalition

Long before there was a Tea Party or Coffee Party or the Beer Party or … there was a group that was concerned about our national debt and deficit: the Concord Coalition.

Formed in the early 1990s, the Concord Coalition has consistently worked proactively to educate and to seek institutional changes in how the U.S. and its citizens manage debt.

Great credit goes to the truly bipartisan effort of the Concord Coalition http://www.concordcoalition.org/ in the late 1990s for supporting policies that not only brought a halt in the growth of our national debt but even put our debt on a reverse course, producing a $1 trillion surplus by 2000.

Below is the Concord Coalition’s view of the Republican’s recently released “Pledge To America”.


Last week, House Republicans offered a “Pledge To America” outlining their fiscal priorities and reform ideas. As with most such campaign manifestos, it is long on base-pleasing rhetoric and short on troublesome details.

The document correctly warns about the dire fiscal outlook and the potential dangers of escalating deficits and debt. Conspicuously missing from the Pledge, however, is any plan to bring deficits down to a sustainable level or even to improve upon the deficit projections in the President’s budget. It is worth noting that such a plan has also been missing from Congressional Democrats this year because Congress has failed to pass a budget resolution.

The net effect of the Pledge policies would do very little, if anything, to rein in our long-term structural budget deficits and may well lead to deficits even higher than under the President’s budget.

Not only would the Republicans cut taxes by more than the President, but they would spend more on defense and repeal cost-saving provisions in this year’s health care reform legislation. In theory, lower spending on non-defense discretionary programs would offset some of this. But savings from discretionary programs, which must be enacted on an annual basis, are far less certain than savings from entitlement reforms or tax increases, which operate on autopilot. Moreover, non-security discretionary spending is not where the major spending growth is projected to occur.

Other Pledge proposals, such as ending the Troubled Asset Relief Program (TARP) and canceling unspent stimulus funds, would have virtually no effect on projected deficits. For the most part, these policies have already played out.

Most significantly, the Pledge does not include recommendations to deal with the biggest spending item — projected increases in Medicare, Medicaid and Social Security. All that is pledged in this regard is to “make the decisions that are necessary to protect our entitlement programs for today’s seniors and future generations.”

That much could be said by AARP or the Democratic National Committee. The issue is not whether such decisions must be made but what those decisions should be. The Pledge leaves us guessing.

On the plus side, the Pledge calls for a “full accounting of Social Security, Medicare and Medicaid” along with “benchmarks,” regular reviews and no expansion of unfunded liabilities.”

However, no mention is made of automatic triggers to enforce these benchmarks nor is there an acknowledgment that preventing new unfunded liabilities would still leave us with the unsustainable liabilities we already have. Simply maintaining the status quo is not enough.

Similarly, the pledge to “repeal and replace” the new health care reform legislation leaves open the question of how, and to what extent, health care costs would be brought down. The greatest fiscal risk is that the legislation’s popular insurance reforms will be maintained while its unpopular provisions to pay for them will be dropped. That would leave us with the worst of all possible worlds -– expanded coverage with no discernable means of paying for it.

Unfortunately, with its promises to “ensure access for patients with pre-existing conditions,” “eliminate annual and lifetime spending caps,” and “prevent insurers from dropping your coverage just because you get sick,” the Pledge leaves the impression that these things can be accomplished at no cost and with no mandate to expand the risk pool and prevent an expensive “death spiral” of adverse selection.

What’s missing is any acknowledgement that expanded coverage is going to cost more and someone is going to have to pay for it. It is true, as pointed out in the Pledge, that the new health care law “does little to address the nation’s growing fiscal crisis,” but the law does offset the cost of expanded coverage with a combination of spending cuts and tax increases. Some of those offsets may ultimately fall short, and Republicans may want to enact a different approach to health care reform, but simply repealing the new law would not improve the deficit projections.

Because details are omitted, it is impossible to project with any precision what the deficit would look like if the Pledge policies were followed. It is possible, however, to make certain observations based on official projections. The most telling of these observations is that extending all of the expiring 2001 and 2003 tax cuts would add $4.8 trillion to the deficit over 10 years. Extending the numerous other tax cuts scheduled to expire, sometimes referred to as “the extenders,” would add another $2.8 trillion. That $7.6 trillion addition to the “baseline” deficit of $6.2 trillion would bring cumulative deficits to nearly $14 trillion.

Even assuming that the Republican estimate of roughly $1 trillion in savings from lower discretionary spending could be achieved, deficits would still remain at unsustainable levels. This is not a “path to a balanced budget” or a plan to “pay down the debt” as claimed in the Pledge.

The Pledge To America makes it clear that House Republicans favor low taxes and limited government. That is a consistent and perfectly sound policy. What the Pledge lacks, however, is any indication that House Republicans are prepared to do what is necessary to achieve this goal. Without more detail about the hard choices, it is a pledge to equivocate.

READ THE ORIGINAL ARTICLE
: A Dubious Pledge by the Concord Coalition

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