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The Affordable Care Act's Medicare cuts in one graph

medicare_numbers_gdp.jpg

That's from Igor Volsky and the Center for American Progress team. Conservatives will look at that graph and say, sure, it might be nice, but those cuts will never be implemented, and if they are implemented, they'll never work, and in any case, we're going to repeal them.

It is of course true that for cuts to work, they have to be implemented, and not repealed. And it is also true that Republicans want to repeal not just the Affordable Care Act, but the Medicare cost controls in particular. And at this point, the Republican Party has not agreed on any package of reforms that would slow Medicare spending by an equivalent amount, and that they would be willing to implement. If you're a deficit hawk, in other words, at the moment, the Affordable Care Act is your best, and really only, hope.

By Ezra Klein  | October 7, 2010; 2:07 PM ET
Categories:  Charts and Graphs  
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Comments

"If you're a deficit hawk, in other words, at the moment, the Affordable Care Act is your best, and really only, hope."

On the other hand if you plan on being old and relying on Medicare one day, you might have cause for concern.

Posted by: MrDo64 | October 7, 2010 2:40 PM | Report abuse

"If you're a deficit hawk, in other words, at the moment, the Affordable Care Act is your best, and really only, hope."

You're forgetting about gridlock. Sweet, sweet gridlock.

Posted by: ostap666 | October 7, 2010 2:50 PM | Report abuse

Ezra: "Conservatives will look at that graph and say, sure, it might be nice, but those cuts will never be implemented, and if they are implemented, they'll never work, and in any case, we're going to repeal them."

Funny. You forgot tot add, "because in our naked pursuit of power to take back the House, we have promulgated an entirely phony theory of economics that will finally destroy our Grand Old Party by driving us into the position of cutting the safety-net to give tax cuts to the wealthy to gamble away on Wall Street without helping the real economy, again."

Posted by: Lee_A_Arnold | October 7, 2010 2:59 PM | Report abuse

Bush and Obama together made these current short term deficits by fighting war and recession. They are big deficits, but under any party they will be over soon.

The real question is the long-term deficits, and who is really bringing them down.

Obamacare doesn't centralize more, so much as shift the accents to universal coverage and cost studies. It covers everybody, and lowers the long-term deficits by 2/3rds.

There are lots of caveats, but what else have you got? Any plan at all ends up as a long-term projection, and any plan at all is subject to change and disarray.

If you want to go in the wrong direction, elect people who think Social Security should be privatized to give tax cuts to the rich in the Wall Street casino. Because we didn't bail them out enough, they still need more.

If you want to go in the right direction, stick with the party that improves the safety-net while slowly reducing long-term costs.

Posted by: Lee_A_Arnold | October 7, 2010 3:08 PM | Report abuse

What's interesting is that it shows it reducing spending even today, if not by a large amount.

Posted by: zosima | October 7, 2010 3:13 PM | Report abuse

and how does the doc fix play into all of this??? Ya, right!

Posted by: visionbrkr | October 7, 2010 3:21 PM | Report abuse

I agree with your basic analysis of both the politics and the shoddy economics of the GOP. Which proves the point that passing ACA was a mistake and irresponsible, regardless of the party, on political economy grounds. ACA is going to be very, very expensive and that would remain true if the Democrats controlled the Exec and Legislative branches for 20 years. That's why Paul Ryan, Wyden and the very few honest politicians of either party are the ones we ought to be listening too. Without real and significant entitlement reform whether through means testing, age indexing, vouchers or a combination of these solutions, we are all screwed.


Steve

Posted by: FatTriplet3 | October 7, 2010 3:22 PM | Report abuse

What happened to the "Patient Protection" part of the PPACA? The folks who paid the requested amount for coverage under Medicare expect to receive the benefits they were promised: as we're seeing in Iowa and elsewhere, the "savings to the government" are being achieved by stripping benefits from those least able to protest.

At some point, the central federal authority will have to abandon its foolish Johnson-era venture into the medical industry. The revenue gleaned from raising "contributions" by the young should be sufficient to pay for the benefits promised to the old: the young shouldn't be promised benefits.

The Center for American Progress Action Fund team also predicted that the PPACA would immediately cure unemployment (and cause unicorns to sprout from happy trees, etc., etc.). So far, none of the economic predictions they have offered have been correct... yet here they go again!

Posted by: rmgregory | October 7, 2010 3:53 PM | Report abuse

That's a lot of Socialism.

Posted by: klautsack | October 7, 2010 4:13 PM | Report abuse

If you don't like the CAP analysis, just go to cbo.gov and review the August 2010 budget outlook and/or the Director's letter to Senator Mike Crapo.

PPACA, according to CBO, reduces HC costs by $455 billion from 2010 - 2020. Repealing PPACA adds $455 billion back to the deficit. That would be about the right magnitude to drive the bar chart from CAP.

So would we rather see Medicare and other HC costs increase by 50% over the next 25 years or shall we go for 100%?

As for Ryan, you can read the 50 page CBO analysis of his plan on their site too, where you will find that he insisted that CBO assume a 30% increase in Federal revenues over current levels while converting Social Security and Medicare to vouchers. And the budget still isn't balanced for decades. Sign me up.

Posted by: Clear_Eye | October 7, 2010 4:37 PM | Report abuse

"If you're a deficit hawk, in other words, at the moment, the Affordable Care Act is your best, and really only, hope."

What a bunch of progressive-honk rubbish, again, from Ezra. The ACA promised $143 billion deficit reduction in the first decade. Don't you remember Nancy waiving the CBO report around?

I've already tallied enough articles since April documenting "whoops" estimates by the Democrats that, using THEIR numbers, it's gone from a $143 billion favorable to $200-$300 billion unfavorable. And we aren't even to the biggest, most expensive parts of the bill yet!

Posted by: dbw1 | October 7, 2010 4:53 PM | Report abuse

Keep in mind the ACA assumed the 21% Medicaid cuts would happen...last June! But they've already extended them once, and as soon as the elections are over they will extend them again.

Why? I have practicioners in my family. Their doctors have already warned that if/when those 21% cuts ever happen, their offices will probably have to stop taking Medicare patients. They can't afford to take a 21% pay cut to continue seeing the folks who are usually the most time-intensive and expensive to treat!

And when that happens, do you want to be in Obama's shoes trying to explain to all the folks on Medicare why they can no longer go to the doctor they want to go to, like he promised them?

Ezra would help his credibility a great deal if he would stop trying to push pie-in-the-sky math that doesn't work here on planet earth.

Posted by: dbw1 | October 7, 2010 4:56 PM | Report abuse

Clear_Eye:
"PPACA, according to CBO, reduces HC costs by $455 billion from 2010 - 2020. "

Let me help bring progressives a dose of reality via a couple examples. The PPACA estimated $5 billion to fund the temporary high-risk pools that go into effect this year and run through 2014 when the full plan kicks in. Several estimates that came out in May and June, less than two months after the PPACA passed, raised that $5 billion estimate to approx $20 billion. That's a 300% miss.

Also in May/June, the CBO issued a 'correction' that there would be $115 billion of costs to administer the PPACA for which $0 was included in the bill.

Now, Clear_Eye, if they missed that badly on a couple of the easy near-term elements of the PPACA, how confident are we supposed to feel that we will EVER achieve the dreamy deficit reductions promised by the "CBO"?

One other favorite non-PPACA example for those who worship at the altar of CBO estimates.....they originally estimated the new Capitol Hill Visitors Center addition to the Capital would cost $70 billion. It wound up costing over $600 billion!

So just take it with a grain of salt when you see Ezra and these other progressives post all these "well, the CBO says" comments.

Posted by: dbw1 | October 7, 2010 5:10 PM | Report abuse

We need to consider cutting overconsumption in addition to looking at strategies to lower prices (such as vouchers or more differential pricing).

Posted by: staticvars | October 7, 2010 5:11 PM | Report abuse

Why didn't we listen to Goldwater and Reagan in the 1960s?

Posted by: krazen1211 | October 7, 2010 6:04 PM | Report abuse

Why didn't we listen to Goldwater and Reagan in the 1960s?

Posted by: krazen1211 | October 7, 2010 6:04 PM | Report abuse

dbw1-
Do doctors really want to turn 60% of their business away at the door? Even if they're paying 20% less, that's still a 48 % loss of revenue. I don't see it happening. Tell them to drive the 5-series instead of the coupe.

Posted by: klautsack | October 7, 2010 6:40 PM | Report abuse

"Conservatives will look at that graph and say, sure, it might be nice, but those cuts will never be implemented, and if they are implemented, they'll never work, and in any case, we're going to repeal them. "

Or, they might say it would be nice if the cuts had been used to make Medicare solvent instead of being shuffled over to the creation of another monstrosity of an entitlement.

Posted by: bgmma50 | October 7, 2010 10:38 PM | Report abuse

Fiat pricing

It's hard to imagine that a govt that was not willing or able to address the structural problems within the idustry -- the provider and insurer cartels -- would have the will or ability to impose lower prices by fiat on an unreformed system.

You don't even have to imagine that the ACA will be repealed, or even that the lower prices Medicare is projected to pay will not be actually imposed. By leaving the cartels in place, we leave them with the untrammeled ability to respond to any lowering of prices for a given set of services by whatever means necessary to insure continued and enhanced profitability. This could include arranging for more units of the given service to be demanded, arranging for alternate services, with uncontrolled prices, to be demanded, etc, etc. All dodges the cartel already employs.

To effectively control the overall costs of a highly complex system just by setting fiat prices requires quite a bit more than just holding the line on intended price reductions. The govt, in order to realiz the projected savings, would have to be able and willing to respond, within the decision cycle of the cartel, to any countermoves the cartel takes to frustrate the price reductions. One thing the ACA signally fails to do is to set up any apparatus that owuld allow the govt to have the needed ability to manage the complex non-system of health care financing in this country.

Posted by: gtomkins1 | October 8, 2010 8:22 AM | Report abuse

Klautsack,

The problem is that doctors, like any rational actors, make decisions at the margins. Many will choose early retirement, some, such as my doctor, will leave the Medicare/Medicaid/Insurance cartel altogether and choose a private pay model. He did, indeed, experience a significant drop in revenue. But he is rebuilding his practice on a private pay model and expects that, by the end of the year, he will be able to close his practice to new patients. Because, at the margin, he valued the ability to practice medicine the way he wanted rather than endure the paperwork and regulatory burden of the current system. And interestingly, his decision was not based on remuneration. It was based on practice patterns. When you talk about a dramatic decrease in payments, many physicians will make the same decision. Supply will decrease, demand will increase, expect long queues when you go to the doctor.

Steve

Posted by: FatTriplet3 | October 8, 2010 11:27 AM | Report abuse

FatTriplet3-

If we lived in a world in which no one had insurance and no one had subsidies of any kind for medical treatment, I agree that the lines at the doctor would be very short. The lines at funeral homes would be considerably longer, however.

Posted by: klautsack | October 8, 2010 11:42 AM | Report abuse

Medicare pays for many things besides healthcare for persons over the age of 65. For example, Medicare pays for residencys for doctors, dialysis for persons of any age, healthcare for some widows and underage children, and disabled persons of any age. The monthly charge to those on Medicare ranges from $110.50 to $353.60. In addition, medigap programs that cover what Medicare doesn't pay for can range from free to $1000 per month. For the very poor, Medicaid pays the basic Medicare monthly charge. Medications are often extra. Likewise, many persons benefit from Social Security other than persons over 65. Medicare and Social Security are simply welfare programs subsidized by older people with high incomes and through payroll taxes of those employed. Any excess funds in Social Security or Medicare not used each year and then used to pay for myriad government programs.

Posted by: windmill3 | October 9, 2010 9:13 PM | Report abuse

The practice of medicine is still done on a transactional basis. The more patients and procedures the more one gets paid. What about changing the paradigm?

Posted by: getreal18 | October 10, 2010 8:19 AM | Report abuse

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