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Posted at 10:57 AM ET, 03/ 8/2011

Cutting Medicare is hard

By Ezra Klein

Paul Krugman on why cutting Medicare spending is more complicated than cutting Social Security spending:

You can propose simply cutting retirement benefits by 25 percent, and that’s doable. But you can’t decide to do only three-quarters of every operation and test that Medicare pays for (and no, you can’t demand that patients pay 1/4 of the cost without effectively denying care to many Americans). So Medicare cuts are an inherently harder problem than SS cuts.

By Ezra Klein  | March 8, 2011; 10:57 AM ET
 
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Comments

So when Democrats designed the Medicare system, do you think that they did not know that costs would skyrocket and it would be politically difficult to reduce the spending to manageable levels? I think that they knew it would cause budget problems, but did not care because they could always raise taxes on the "rich" to pay for it later.

This is why I find it amusing when liberals accuse Republicans of passing legislation that is not paid for. Medicare and Medicaid where the biggest insufficiently financed programs in the history of the world.

Posted by: cummije5 | March 8, 2011 11:20 AM | Report abuse

well sure that's why they take on the low hanging fruit of SS. They (both parties) can stop kicking the can down the road on the SGR of medicare. They can reduce payments by "X" percentage. Sure some providers will drop medicare but that's what you're going to see whenever you make needed cuts.

Or you can say you're not going to pay for certain procedures deemed less effective than others as long as you don't get demagouged like the death panel discussions in the summer of 2009.


Or you can use capitation in Medicare instead of FFS.

There are plenty of ways to do it but no one that wants to get re-elected has the audacity to go ahead with what's needed to reform entitlements.

Posted by: visionbrkr | March 8, 2011 11:20 AM | Report abuse

Social Security's problem is minor, and it arises many years from years from now. It is easily addressed by relatively minor adjustments on the revenue side and/or means testing. The constant talk of how the solutions must involve some reduction in benefits, raising the retirement age, etc., simply are designed to create the false sense among future retirees that the system is not sustainable.

Please, Professor Krugman and Ezra, don't fall into the trap of supporting that illusion with rhetoric that suggests that 25% cuts are "doable." As our percentage of seniors grows, and as many of them will have been unable to accumulate adequate retirement savings, the modest checks sent out by SS will become an even more important safety net, and cuts would be disastrous. Likewise, when we struggle to create jobs for 90% of our current workforce, postponing retirements will be counter-productive to maintaining full employment.

Medicare's problem is more severe and immediate, and the solution can't be found by nipping away at covered services and/or by raising taxes as fast as costs. The solution for Medicare can only come through a fundamental overhaul of our systems for delivery of health care in order to contain costs.

We punted on cost controls in the ACA, but eventually we have to face the glaring fact that we receive less value per dollar spent on health care than any other nation in the world, and we have to face the question of whether our for-profit system is sensible and sustainable.

Pretending that we can tweak Medicare back to solvency by constant budgetary adjustment is illusory, the budgetary imbalances are merely the symptoms of a much bigger problem that we have failed to address.

Posted by: Patrick_M | March 8, 2011 12:04 PM | Report abuse

"Mannnn, governing responsibly is HARD! Let's let someone else do it."

And we're told the rich work so hard for their money! We may do better if we had more middle class congressmen and fewer lazy rich people.

Posted by: will12 | March 8, 2011 12:06 PM | Report abuse

I do not think that the folks who envisioned Medicare imagined a world where a child who is born at 25 weeks can survive but survive with significant medical problems that are very expensive to treat. The same is true of seniors. At one point, breast cancer meant radical surgery and low five year survival. Now breast cancer means high 5-year survival but what is required is expensive. Imagine that 1 out of 10 women will get breast cancer. Following that women from diagnosis to remission and control means she will interact on some level with a Family Doctor, Surgeon, Anesthesiologist, Oncologist, Radiation Oncologist, and Pathologist. The support staff for all the providers will also need to be paid. Not to mentioned all of the technology that is used to treat breast CA - mammograms, special pathology/chemical stains to determining tumor type, and chemotherapy.

How do you cut those cost without arbitrarily rationing care. Do you say we are not going to pay for molecular biology staining for breast cancer even though chemotherapy can be tailored by it? Do you cap the amount you spend? What happens to the women who show up after the cap has been met? Again care is rationed arbitrarily.

So Krugman is right. Healthcare costs are and will continue to be difficult to control. The best efficient way to control healthcare cost in my mind is to reduce waste, fraud, and more importantly figure out what works and is needed for a large number of people.

To borrow from the President, use a scalpel and not a hatchet.

Posted by: rfjohnson77 | March 8, 2011 12:14 PM | Report abuse

You could also simply pay providers 25% less, doc "fix" be damned.

Posted by: mjp8 | March 8, 2011 12:52 PM | Report abuse

HCR is not my specialty as I have stated many times, but I love to hear people in general talk about the ability to rein in government spending by reducing "waste, fraud and abuse". There is cetainly a lot of waste in governmnet spending, but actually relatively little fraud and abuse when compared with private industry.

When you look at the massive, massive, fraud which generated the most recent economic collapse, all of which occured in private industry, or the Madoff scheme, there is simply no government parallel.

Kill the governnment for what it does badly, but not for some ridiculous notion that people are defraduing it in massive amounts.

Posted by: johnmarshall5446 | March 8, 2011 3:47 PM | Report abuse

You certainly can cut Medicare payments 25%. It's called Medicaid.

Posted by: bmull | March 8, 2011 10:08 PM | Report abuse

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