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Tag Archives: Medicare

What the Heck, Huck?

Gov. Mike Huckabee has seized the no-changes-to-entitlements mantle from among the Republican wannabes and he’s set to run on it, aligning himself with people like Elizabeth Warren.

Politically, this is not such a dumb idea. There are a lot of seniors, including conservatives, who are understandably worried about their potential lack of gold to fund their Golden Years and fear changes to Medicare and Social Security. A barnstorming populist like Huckabee is particularly well suited to take the issue to his more buttoned-down rivals in the GOP.

Screen Shot 2015-05-07 at 12.58.10 PM“Let them end their own congressional pensions, not your Social Security!” Huckabee thundered Tuesday as he announced his candidacy. Washington, he said in a video, “has done enough lying and stealing. I’ll never rob seniors of what our government promised them and even forced them to pay for.”

Huckabee, as a matter of principle, is right. Government has promised these benefits and now can’t pay them. But that’s also the problem. The government can’t pay its obligations. It made promises it couldn’t keep. Because that’s what government does.

The latest estimate of the 75-year unfunded obligation for Medicare and Social Security is about $50 trillion

Now, let’s make this clear. That’s not the the government’s total obligation. That’s its unfunded obligation. It’s money it is supposed to pay out, but for which it hasn’t even assessed taxes or found spending cuts to get the cash.

THERE IS NO MONEY, HUCK.

People talk about when Social Security and Medicare will be bankrupt. I have some news. THEY ARE BANKRUPT RIGHT NOW. What else would you call a business running a $352 billion shortfall every year?

Those projected “bankruptcy” dates you hear about are accounting illusions. They presuppose that there are actually “Trust Funds” now being “tapped” to pay beneficiaries. But the Trust Funds, as you may know, don’t exist. The government collected your Social Security and Medicare taxes and spent it on other stuff. And now the Social Security and Medicare taxes it brings in aren’t enough, so it must plunder the General Fund that’s supposed to be for regular government spending.

According to the Medicare and Social Security Trustees:

The total General Fund requirements for Social Security and Medicare in 2014 are $352 billion, or 2.0 percent of GDP. Redemption of trust fund bonds, interest paid on those bonds, and transfers from the General Fund provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

The annual deficit for Social Security alone, at $77 billion, is less than Medicare, but will rise quickly:

The Trustees project that this annual cash-flow deficit will average about $77 billion between 2014 and 2018 before rising steeply as income growth slows to its sustainable trend rate after the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

Nobody is realistically proposing taking benefits from current or even near retirees. But if the programs are to be saved, cuts to benefits for future wealthier retirees and an eventual increase in the retirement age, among other reforms, must occur. Otherwise, benefits for all will have to be cut, for rich and poor alike. That’s where Huckabee’s rhetoric is leading.

Because the money isn’t there. And every year we wait, as we have done under President Obama, the long-term shortfall gets worse.

Yes, it is breaking a promise to those who have contributed even a dime. It is not, however, as is sometimes suggested, taking people’s actual money away, since Social Security and Medicare are not savings programs. Your contributions fund current retirees, not yourself, and that’s the way it’s always been. If you are retired, current workers are funding you. So call your kids and thank them.

What entitlement reform does is try to set up a plan where those who can most afford the cuts get them. Because benefit cuts will have to happen. Unless retirees want payments as fictitious as the Trust Funds.

Obama Debt: Over 8 Percent of $1 Quadrillion

The longterm U.S. debt under President Obama’s latest spending plan is far worse than his budget suggests, reaching a total of about $84 trillion – that is, 8.4 percent of a quadrillion dollars, or $0.084 quadrillion.

Yes, it’s time to start using the quadrillion number, because with trillions getting added to the debt at an accelerating pace, the numbers are starting to become meaningless again unless put in the proper perspective.

The Obama budget forecasts a startling federal debt of just over $25 trillion. But that’s only the beginning of the frightening story of the government’s longterm obligations.

Over future decades, Medicare – before taking into account Obama’s “cuts” – has an unfunded liability of close to $43 trillion, according to the most recent Social Security and Medicare actuaries report. That is what the government is currently obligated to pay out to this and the next couple of generations – but for which it has no method on the books of raising money. It just owes that amount, and would currently have to borrow to pay it.

Similarly, the unfunded liability of Social Security is about $20 trillion. And the government has about $6 trillion in unfunded obligations for federal worker pensions. All told, we’re in the hole for about $94 trillion, or nearly $0.1 quadrillion.

Obama’s budget makes cuts to Medicare over the next decade totaling about $370 billion – as you can see, a minuscule portion of the total obligation. And the cuts are mainly to health care providers, which doesn’t amount to the type of serious “reform” needed to save the program. What’s more, the reductions are unlikely to be fully realized because of the lobbying muscle of doctors, hospitals, and other providers.

Obama’s call for chained CPI is, however, a serious proposal that could reduce Social Security’s imbalance by 20-25 percent. So let’s assume under Obama’s plan, Social Security would have an unfunded mandate of about $15 trillion. And let’s be generous and lop $5 trillion off the longterm obligations of Medicare, bringing its shortfall to about $38 trillion.

We’re still at $84 trillion, or $0.84 quadrillion, in total indebtedness.

Now you understand why Republicans are demanding Obama get serious about reducing the debt and enacting entitlement reform, and why his current plan doesn’t seem very serious at all.

Obama Was Against Demonizing Ryan Before He Was For It

President Obama once counseled against the very attacks his campaign is launching against Wisconsin Rep. Paul Ryan’s Medicare plan, saying during a January 2010 appearance that politicians shouldn’t demonize proposals by charging they would harm seniors:

We’re not going to be able to do anything about any of these entitlements if what we do is characterize whatever proposals are put out there as, “Well, you know that’s – the other Party’s being irresponsible, the other Party’s trying to hurt our senior citizens.”

Have a look:

And yet, in a new video, the Obama campaign says exactly this, flashing across the screen this judgment about Ryan’s Medicare proposal: “It hurts seniors.”

The ad is the spearhead of a comprehensive campaign designed to do what Obama claimed to be against.

In the just the 48 hours since Mitt Romney announced his selection of Ryan, Obama campaign adviser David Axelrod has said “Republicans don’t like Medicare,” and that Ryan’s plan would “ship thousands of dollars of costs onto senior citizens.”

In a fundraising email, Senate Majority Leader Harry Reid (D-Nev.) said Ryan’s plan would “destroy Medicare” and amount to “dismantling the nation’s social safety net.”

The attacks are sure to only escalate.

Obamacare Raids Medicare and Makes Off With $716 Billion

Obamacare would snatch $716 billion from Medicare to pay for its expensive outlays, an startling increase of nearly $200 billion from the original estimate of the law’s impact, according to an analysis by the independent Congressional Budget Office .

The new numbers create a potential political hazard for President Obama, who desperately needs the votes of Medicare beneficiaries in senior-rich swing states like Florida and Pennsylvania.

What’s more, the cuts are regressive, affecting all beneficiaries, since they are aimed at health care providers. Serious Medicare reform, which Obama has studiously avoided during his years as president, would be much more targeted toward benefits, particularly those of wealthier seniors.

The CBO study, which comes in a analysis of GOP-backed legislation to repeal Obamacare, finds that repeal would recoup $716 billion in cuts to Medicare that Obamacare would make from 2013-2022.

According to CBO:

Of that amount, higher payments for hospital services account for $260 billion; for skilled nursing services, $39 billion; for hospice services, $17 billion; for home health services, $66 billion; and for all other services, $33 billion.

An analysis of the original March 20, 2010 CBO estimate found that Obamacare would cost Medicare $533 billion dollars during the 2010-2019 ten year period, according to the Kaiser Family Foundation, the independent health policy analysis group relied on by both Democrats and Republicans,.

Since the new estimate covers a later ten year period, the increase in Obamacare’s take from Medicare is not due to a mistake in the original estimate, but to a real and growing adverse effect of Obamacare on Medicare’s finances over time.

The huge cuts in Medicare, coupled with dramatic increases in taxes, were part of an effort by the law’s authors to overcompensate for the costs of Obamacare so they could sell the legislation as a measure that would reduce the deficit.

It does, but at substantial and growing cost to Medicare.

What’s more, the small surplus Obamacare generates is also declining, according to Chuck Blahous, one of the officials who oversees Medicare and Social Security’s finances as a Public Trustee of the programs.

Blahous, a budget expert and a former aide to George W. Bush, writes that CBO’s current estimate of the deficit savings by Obamacare over ten years is lower than last year’s estimate has been cut nearly in half from the original 2010 projection.

H/T to Alyene Senger of The Foundry, The Heritage Foundation’s blog.

Public Supports Entitlement Overhaul, but Not Cuts

Updated 4:09 pm

With Social Security and Medicare reform apparently in the debt ceiling talks mix, the Pew Research Center has just released a poll showing that the public indeed supports major changes to the programs – but not cuts in benefits.

This is approximately like saying you want to lose weight, but on the Kentucky Fried Chicken diet designed by Col. Sanders.

According to the poll, 54 percent of Americans say Medicare – where the deficit reduction big bucks are – needs major changes or should be completely rebuilt, while 38 percent think it’s working pretty well. However, when asked which is more important, taking steps to reduce the deficit or keeping Medicare and Social Security benefits the way they are, only 32 percent choose reducing the deficit, while 60 percent say leave the benefits untouched.

According to Pew:

The public’s desire for fundamental change does not mean it supports reductions in the benefits provided by Social Security, Medicare or Medicaid. Relatively few are willing to see benefit cuts as part of the solution, regardless of whether the problem being addressed is the federal budget deficit, state budget shortfalls or the financial viability of the entitlement programs.

So here’s the question: Will our political leaders over the coming days take a political risk to actually reduce the deficit? Anyone who has studied the problem knows the money is in the entitlements.

Leadership on such a fundamental matter must come from the president, and the top Republicans must be close behind. So far we’ve gotten general statements from Obama on wanting to address entitlements. We’ll see if he backs up the words with real, politically risky proposals.

UPDATE: One of our readers, Susan, made a statement in the comments section that I think should be part of the actual story:

It all depends on how the question is asked. Pollsters know how to manipulate a question to get the answer they want. The question I would like to see asked: Do you favor a overhaul of Medicare, which may result in reduced benefits, as long as current beneficiaries and people 55 and older are not impacted by the reform? Bet you would get an overwhelmingly positive response if the question were posed that way.

This, in fact, is the only kind of reform being considered, and indeed, pollsters who leave this qualification out are not being responsible.

Obama Administration Begins Death Panels

There are, in Washington, THE THINGS EVERYBODY KNOWS.

EVERYBODY KNOWS,  for example, that the Tea Partiers are a bunch of right wing boobs. You cannot, in polite conversation in the nation’s capital, say something like, “Wow, that was a really good idea those Tea Party people had.”

You will be laughed right out of the room. Washingtonians did not have their parents pay for elite East Coast university educations only to have to listen to nonsense from the common-sense crowd in the hinterland.

EVERYBODY ALSO KNOWS that Sarah Palin was just being her usual idiot self when she talked about Obamacare leading to Death Panels. Her assertion is dismissed out of hand in mainstream – supposedly neutral – news reporting as wrongheaded hyperbole.

I have never understood why this occurs, other than that the statement is coming from Sarah Palin and that it makes Obamacare sound like it might be a little scary.

But the logic is very simple. Under the health reform law, the government will have extraordinary new control over health insurers. The companies will be heavily regulated and restricted in their ability to raise rates, even as they are forced to cover everyone and drop no one and provide a variety of mandatory benefits.

To stay in business, they will have to cut costs.  And where is the best place to cut costs? END OF LIFE CARE. And who will decide what is appropriate end of life care? DEATH PANELS.

Or something equivalent.

So I hope you are not shocked to read in the Washington Post that Donald Berwick, the new Medicare chief, is considering withholding payment for Provenge, an expensive new prostate cancer vaccine that would extend life for terminal patients by a median of four months.

In the world of terminal cancer treatment, taking exceptional steps to extend life for a median of four months is a quite unexceptional thing to do. It’s considered successful treatment. It also means that some patients will live quite a bit longer.

It is not customary for Medicare to include cost considerations in making such a ruling, according to the Post. Berwick’s decision the consider cost is groundbreaking and has consequences for all of the health care market, beyond Medicare. Insurers take their cue from Medicare. If the feds ain’t paying, Aetna ain’t paying.

But Donald Berwick, you will remember, is not your ordinary Center for Medicare and Medicaid Services Chief.

Before Donald Berwick goes to sleep every night, he says a prayer thanking The Lord for the British health care system.

Obama and Berwick decided in July that it was so important for him to get right to work that he couldn’t possibly be subject to annoying questions about his views from the Senate. So Obama installed him by recess appointment.

Among the uncomfortable quotes senators might have wanted to have discussed with Berwick:

The decision is not whether or not we will ration care – the decision is whether we will ration with our eyes open.

and

Any health care funding plan that is just, equitable, civilized and humane must, must redistribute wealth from the richer among us to the poorer and the less fortunate. Excellent health care is by definition redistributional.

Berwick, in keeping with his preference for avoiding scrutiny while doing what HE KNOWS  is best, declined to comment to the Post.

Obama Suggests Medicare Benefits Will be Cut

Did Obama just say we’re going to have to start cutting Medicare benefits? And just as the campaign season is ramping up?

During an event at someone’s home in Columbus, Ohio today, the president was busy knocking softballs out of the park – “Hi President Obama . . .  thank you for doing such a wonderful job” – when suddenly someone who runs an ophthalmology practice asked him what exactly doctors are supposed to do as Medicare increasingly gives them the finger instead of payment for services.

Obama babbled through the usual patter about how we’re going to make everything more efficient and bend the cost curve to decrease health costs – even as expensive new technologies come to market and the new health reform law increases demand for services.

He kindly and gently lamented “that Social Security has to be tweaked because the population is getting older” and “we’ve got to refresh and renew Medicare to make sure that it’s going to be there for the next generation, as well.”

But then, incredibly, he got down to business. Here’s what he said.

So we’ve made Medicare stronger just with some of the changes that we’ve already made.  But you’re absolutely right that we’re going to have to keep on making these changes to continue to make it stronger.  And that will affect not just Medicare; it will affect the entire health care system.

Because there’s no doctor out there who doesn’t see Medicare as the $800 gorilla.  If Medicare is saying you’ve got to improve your quality and efficiency, then they will because they’ve got a lot of Medicare patients.  But they also have a lot of regular patients.  So hospitals, doctors, everybody starts getting more efficient as Medicare gets more efficient.  The key is making sure that we’re not just cutting benefits.

Not just cutting benefits? So WE WILL BE CUTTING BENEFITS?

With the federal budget dripping with red ink and mandatory spending like that for Medicare causing much of the spillage, is it possible that the president early next year is going to lay out an adult-style budget that takes a serious stab at slicing the deficit? And not by just raising taxes?

This is good news. Because a small matter like THE FATE OF THE WORLD ECONOMY depends on the United States producing credible evidence that it is going to reduce its deficit.

And the evidence ain’t going to come from the House or Senate appropriations committees, even if Republicans are running them.

It has to come from Obama. Let the tweaking and refreshing begin.