Kick the Can

Trudy Lieberman digs into a report from Medicare's chief actuary, Richard Foster. It's an analysis on the projected effect of health care reform on health care costs.

Here's Trudy:

Foster crunched some numbers and found that health care costs will likely continue to increase, despite promises from politicos that reform would actually lower them and make those darn insurance premiums affordable. Upon signing the new law last month, the president himself said that the measure would “bring down health care costs for families and businesses and governments.” Well, what do you know? It may not.

Simply put, Foster says that the new law will not slow the growth of the nation’s health care bill. Instead, the cuts in Medicare spending and other ways Congress has finagled the financing won’t offset the big bucks needed to provide health insurance to thirty-four million currently uninsured Americans. In fact, Foster wrote that the country’s medical spending would increase by about $311 billion (0.9 percent) over the next decade. One of the biggest reasons is that more insured people will be using more services. That should have been obvious, given that the total health care expenditures equal the number of services times their price.

So, yes, you will have more people insured, yes egregious exploitation of consumers will be reined in somewhat - but the overall problem remains. We will continue to spend more on health care.

The last time we went after Medicare spending (mid-1990s) - we did not fix much of anything. Newt Gingrich described that effort as "a little bit like having a car that needed an engine overhaul, and we changed the spark plugs and got you to the next phase."

As if that weren’t enough, Foster['s report] raised the specter that Congress might have to revisit some of the Medicare cuts—perhaps even cancel them, as they have done for the doctors year after year. Even though in the late 1990s Congress decreed cuts for the docs, physicians have repeatedly lobbied the press and the pols to stop the cuts from taking effect, and they are scheduled to do that again this week. Furthermore, the report noted that the proposed cuts might be deep enough to affect the solvency of about 15 percent of hospitals and nursing homes, causing some to stop treating Medicare patients and “possibly jeopardizing access to care for beneficiaries.”

So, we've created a promise to cut Medicare payments - that will likely get lobbied out of existence. If the cuts do go into effect we'll have hospitals in jeopardy.

I don't think anyone ever believed that the heath care bill would put our health care troubles to bed - but if Mr. Foster's projections prove out - I'm sure I won't be alone in my disappointment that we had a year worth of legislative combat, and the end result was Medicare getting another shiny new set of spark plugs.