$222 Billion, Ho Hum
Another warning that reform 'bends the cost curve'—up.Article Comments more in Opinion »Email Printer
www.wsj.com
________________________ ________________________ ____________Among the astonishing things about the ObamaCare debate—or lack thereof—is that Washington is inundated with warnings about the destructiveness of this plan, and it doesn't matter. The agency that runs Medicare rung the latest alarm bell on Friday, and good luck finding any media mention.
Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, reports that under his analysis national health spending will rise under the bills by $222 billion over the next 10 years. In other words, ObamaCare really does "bend the cost curve"—up. Even that estimate exists only on paper, as Mr. Foster has the honesty to admit. Because "most of the coverage provisions would be in effect for only six of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the proposed legislation," he writes. The report is punctuated by phrases like "unrealistic" and "doubtful," and Mr. Foster adds that "the scope and magnitude of these changes are such that few precedents exist for use in estimation."
That $222 billion is a net figure, even after accounting for the fact that most of the newly insured—18 million people—will be dumped into Medicaid, "where provider payment rates are well below average." And for the fact that ObamaCare is "paid for" only in the sense that Medicare's payments to doctors are assumed in the bill to be cut by more than 20% this spring and even deeper after that, which will never happen in practice.
Mr. Foster adds that other planned Medicare cuts would damage doctors and hospitals: "Over time, a sustained reduction in payment updates, based on productivity expectations that are difficult to attain, would cause Medicare payment rates to grow more slowly than, and in a way that was unrelated to, the providers' costs of furnishing services to beneficiaries." This is how price controls would work in practice, even as Medicare has hit its spending targets only four times in the last 25 years.
He says many providers will be forced to stop accepting patients who are insured by the government, as opposed to those who have private coverage "with relatively attractive payment rates." The resulting two-tier health-care system "should be considered plausible and even probable initially." As for the White House's promise that it will reduce health spending painlessly by cutting "waste," Mr. Foster isn't buying it. He writes that "we find the language as it now reads is not sufficiently specific to provide estimates."
The report also calls out the new entitlement program for long-term care, which is included only because it will start collecting premiums five years before it starts paying benefits. In return for this accounting gimmick, the fisc will be saddled with a program that Mr. Foster estimates will be bankrupt by 2025. It may be sooner than that, however, as the program will tend to attract sicker people, presenting the possibility of "a significant risk of failure as a result of adverse selection by participants."
Studies like Mr. Foster's have been coming left and right but they do nothing to stop the political march off the cliff. Welfare reform would never have had a chance if even a single analysis like this one had come out before the vote. But somehow Democrats get a pass from the press corps and political class because—why?
________________________
________________________
______________________
Is this what you people voted for?
