The 5 Most Important Things You Need to Know: Medicare by the Numbers

John Goodman – NCPA

Texas Insider Report: AUSTIN, Texas – Here are the five most important things you need to know about Paul Ryan, Barack Obama & Medicare. You won’t find this anywhere else.

1. Seniors Take It on the Shin. Without any help from Paul Ryan — and without a single Republican vote — the Affordable Care Act is going to reduce spending on Medicare by $523 billion over the next 10 years, relative to what it would have been.

This reduced spending — which will mainly consist of lower fees for doctors and hospitals — will continue into the future and will be enforced by an independent commission. Although the Congressional Budget Office (CBO) and the Centers for Medicare & Medicaid Services (CMS) have different projections, Obama administration representatives have officially signed off on the CMS report, which projects that Medicare will grow no faster than the rate of growth of gross domestic product (GDP), as the following chart shows.
To give you some idea of how radical this change is, on the day Barack Obama signed the Affordable Care Act legislation, he cut Medicare’s long-term, unfunded liability in half!

2. My Line Is Lower than Your Line. Despite the hysteria on the left about the Bowles/Simpson, Rivlin/Ryan and the Domenici/Rivlin plans, the ObamaCare Medicare cuts are much harsher than any of these proposals. And most critics of these entitlement reform plans were enthusiastic supporters of ObamaCare.
Ignoring the political maxim to never get between an opponent’s gun and his foot, the new Paul Ryan budget manages to top even ObamaCare by roughly tracking the Affordable Care Act spending for the next decade and then allowing Medicare spending to grow no faster than the consumer price index.
In response to Ryan, President Obama has proposed a growth rate for Medicare of GDP + 0.5%, which is less than the CBO projection for ObamaCare (GDP + 1%) but more generous than the CMS projection (GDP + 0%), which the administration has already signed off on. Go figure. (See the chart below.)

3. Not Reforming Health Care. None of the proposals (including ObamaCare) have any serious plan to reduce health care spending for the country as a whole. This means that Medicare spending will fall further and further behind what everyone else is spending under every proposal. Under ObamaCare, for example, the Office of the Medicare Actuaries estimates that Medicare payments will fall below Medicaid payments by the end of this decade.

Also, none of the proposals have any mechanism that would allow people to build up tax-free savings to be able to afford to replace reduced Medicare spending with personal out-of-pocket spending. This is enormously important because none of the projected cuts will be made if a backlash from elderly voters makes them politically impossible.
4. Ignoring What Has Already Been Proposed. The Coburn/Ryan health bill is the only serious proposal to fundamentally change the economic incentives of employers, employees and medical providers. But even it does not go far enough to bring total health care spending in line with what is being proposed for Medicare. We have suggested ways of making the Rivlin/Ryan plan better and achieving reasonable goals here.
5. Ignoring What Is Already Being Done. Despite the hysteria over the idea of Ryan’s concept of “premium support,” the idea actually originates with left-of-center economists Henry Aaron and Bob Reischauer (see Ezra Klein) and we already have it in Medicare.

It’s called Medicare Advantage and about one-fourth of all Medicare enrollees participate in it. In addition, the subsidies for private plans sold in ObamaCare health insurance exchanges will also morph into premium support. We also already have something similar to Accountable Care Organizations (ACOs) — the Obama administration’s hope for controlling costs for Medicare.

They are called Medical Service Organizations (MSOs) and they service Medicare Advantage plans — the plans ObamaCare has targeted for defunding. (Again, go figure.) I’ll write about this more in the future.

Visit John Goodman’s Health Policy Blog, and read “Repeal and Replace”.


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  7. pnut is obviosly fine with the government’s new mandate that everyone has to buy health insurance. I guess he will be fine with them telling him how to eat, live, and what car to drive.

    If people really want health insurance they can buy affordable policies without heath care reform. They choose not to. They would provide better coverage than anything the government could ever try to.

  8. Pnut, you asked what’s wrong with the word “socialism” and “Why have people demonized this concept so completely?”

    Here’s a simple answer. Socialism strips away a man’s dignity as a unique creation of almighty God and reduces him to an organism that evolved from “pondscum.” The religion of socialism is a mixture of secular humanism, agnosticism and atheism. All these belief systems are anti-Christ and against God’s plan for mankind.

    Socialism demotivates a man to be a producer (giver) and converts that same man into a demotivated producer thus making him a lazy taker. Why should one want to succeed as a doctor when they are going to be paid the same salary as a trashman? That’s somewhat of a hyperbole but it’s not too far from reality. In socialism, all are equal. That’s not reality. God has gifted some people more than others with talents and abilities. They shouldn’t be punished because they are able to obtain wealth easier than others. I Sam. 2:7 “The LORD makes poor and rich; He brings low, He also exalts.” Prov. 22:16 “He who oppresses the poor to make more for himself or who gives to the rich, will only come to poverty.” Prov. 10:4 “Poor is he who works with a negligent hand, but the hand of the diligent makes rich.”

    When socialism reduces a man to a lazy taker, here’s an admonition that the church in the U.S. needs to shout from the roof tops. II Thess. 3:10,11 ” For even when we were with you, we used to give you this order: if anyone is not willing to work, then he is not to eat, either. For we hear that some among you are leading an undisciplined life, doing no work at all, but acting like busybodies.”

    Pnut, this is just an extremely short answer to the depraved, Satanic philosophy of “socialism.”

  9. He can’t CW. Dont it seem funny that everytime it gets close to election time the liberals come out.

  10. AND what is truly working Genius?
    Certainly NOT Greece, Spain, Ireland, England, France, Canada. Everyone Everywhere wants to come to America IDIOT.
    Explain that.

  11. I would really like to know, what is the problem with the word “socialism”. Why have people demonized this concept so completely? The only reason I can find is that historically (20th century), the socialists were communist Russia, who posed an existential threat to the United States during the cold war nuclear arms race.

    But that doesn’t have anything to do with whether socialism is bad as a concept in any amount, only that we could stereotype socialists as invaders during a period of time that is long gone. I suspect that in truth, it is a code-word for bigotry. Joe McCarthy certainly made it so, if it wasn’t already.

    It looks to me like free-market ideology, in its extreme form, is just as toxic as complete socialism, on the other end of the spectrum. And it looks like the countries that are well-positioned for the future, are borrowing good ideas from wherever they come from, in order to make the country function as well as it can. Who cares what it’s called, as long as it works.

    Your concerns about the extreme forms of socialism are duly noted, and I’m sure you will be vigilant in the future that we don’t swing too far in that direction. But we have to be open-minded enough to see what is truly working in this global experiment.

  12. pnut: “Loaded” or not, “a rose by any other name…” Single payer, universal healthcare is still a hallmark of socialism. There are free-market solutions to cost containment, and increased competition amongst insurance providers would help a lot. If policies, customized to the needs of the individual and family situation, and could be offered across state lines, the costs of policies would fall as competion increased.

    Point 5 in the above article is very important in that it explains why AARP signed on to support ObamaCare, despite the fact that doing so was not in the best interests of their membership, only their “bottom line” profits from the sale of their health insurance policies.

    About one-fourth of all Medicare enrollees currently participate in Medicare Advantage, a good program; but AARP does NOT sell Medicare Advantage policies, and it was cutting into their profits derived from the sale of their not-as-good policy. Since Medical Service Organizations (MSOs) service Medicare Advantage plans, the very plans that ObamaCare, if implemented, has targeted for defunding, AARP would benefit financially as their competition disappeared.

  13. Hi highlandskye, you were doing great for a while in your post, and I hope you find a way to continue to obtain the healthcare you need. I’m not sure which countries in Europe you’re referring to, or whether you have any actual information about their specific situations. More than likely, you’re referring to the recent austerity measures in Ireland and the UK, both of which have thrown those economies into a double-dip recession.

    But anyway, that is not related to the concept of affordable healthcare, and those countries’ financial issues are not due to their healthcare systems. And anyway, the austerity measures they took did NOT include eliminating their universal healthcare. Maybe you could target your animosity at “Ann American”, who thinks you shouldn’t have any assistance AT ALL for your old-age healthcare?

    Insurance works by spreading out the risk. You can get health insurance to cover very expensive health bills by paying monthly, and being in a pool of generally healthy people. This is how company health care plans work, and the larger the company, the better the deal you can get on your monthly bill, because the risk is spread out over more people. So what would the ultimate be? Spread the risk over everyone! Then the cost to the individual would be as low as it could possibly be. It is insane to be against this for ideological reasons – this approach has the greatest direct benefit to every individual. What is the alternative? Have a for-profit company try to under-pay your benefits, in order to maximize profits. That’s the system you people are arguing for. You will never get an efficient system that way, I’m sorry.

    Call me whatever you want, I think you all are opposed to a known good solution and your logic for the opposing viewpoint is weak. “Defending Freedom” is weak.

  14. I’m on Medicare as a senior citizen. While we scream about the unconstitutionality of being required to purchase insurance under Obamacare, those of us on Social Security are already doing that. We cannot get our Social Security unless we also purchase Medicare which takes 10% of my Social Security check. Medicare covers so little that any decrease in what it covers will mean little. Medicare Advantage – which means we can use our Medicare payment plus another payment – means that we at least get somewhat decent coverage. And, by the way, the age at which one retires is no longer 65 but is already closer to 67.

    Our problem in this country is not whether people are covered by insurance but the cost of the medical care. If the cost of the doctors and hospital charges were reduced, we could all afford insurance to cover them. I remember “the old days” before the medical community was required to pay outrageous liability premiums just to stay in business. If we allow insurance companies to work across state lines as with the auto insurance companies do, that in and of itself would help lower insurance premiums.

    Trying to find a doctor that will take Medicare is almost impossible. They simply cannot afford to do it with the expense of doing business, the lengthy time it takes to get paid and the hassle of the red tape involved. When visiting my son, I developed bronchitis. Being a Saturday, he took me to a local Urgent Care facility – there was no need for an emergency room. Because he too was ill, he also needed to see a doctor. There was no problem with him. He simply showed his insurance card. As for me, they didn’t see Medicare patients. When my son said that he would pay in cash for my office visit, he was refused as I was covered by Medicare. I would have to go to the emergency room if I wanted to see a doctor. And, yes, this was in Texas.

    If we don’t cut everything across the board, do away with all of our giveaways, and quit living beyond our means, there will be nothing for anyone. It’s like the family that lives beyond its means. It can either continue putting everything on a credit card, not making even the minimum payment, until the large house payment, car payment and utilities can’t be paid. They either continue living at that level, go bankrupt and lose everything, living on the street, or they get serious, sell the lovely home and get a small apartment, sell the big car and buy a little one, and use the extra money to pay off the credit cards. One way they are on the street – the other they still have a life.

    That’s what we need to do. The cuts will hurt in everyone’s backyard. But, please, don’t use scare tactics as this administration is doing or use fuzzy math. Giving us an inflation rate that leaves out food and energy is an example of fuzzy math. It may make us feel good seeing the numbers but we know it isn’t true when we fill our car or pay at the grocery store. Give us the honest across the board facts. We can then make an informed decision.

    As for “pnut” and his comments – universal healthcare was tried in England and other European countries. They were going broke until they began making changes last year. It simply doesn’t work. That’s why so many from other countires came to the US for treatment. Perhaps what we really need to do is bring back something called “personal responsibility” and “common sense.”

  15. Ann I really enjoy you FRANK evaluations of the situation at hand. In the next few days I will be redirecting my efforts so am going to count on others to continue to carry on the battle here.
    I have GREAT confidence that their are many capable of keeping the flames of Freedom burning brightly here. God Bless you all and keep up the fight:)

  16. When getting health insurance I usually go through “Penny Health Insurance” website. The reason for this approach is because I get more personalized service and assistance. Once I went though ehealthinsurance and it offered no customer support.

  17. Health Care for the aged is not a Constitutional Right. It is a Socialist idea introduced to America by
    the left and is too expensive to sustain. When America goes broke, who then, will pay for
    health care for anyone, save the very rich and connected?
    No one will have health care. There will be no money to pay for it.

    Lenin said Universal health care was the lynchpin to Socialism. The true agenda!
    It seems to be what Obama and his minions would foist upon us to control us.
    Basic health care has always existed. Dr.’s were compensated with money and goods

    If we need health care in any form, it would be a catastrophic health care plan that pays
    only if a catastrophe befalls us an makes it impossible for us to handle the expenses incurred.

    All other Medical and Dental paid for out of pocket. Govt. butts out of what it never
    should have gotten into and prices drop to manageable levels for everyday
    health care needs. Most would be supplemented by private insurance.

    What a concept!! Pay your own way and handle health care like every other
    purchase, between the Dr. and the individual. Establish Tort reform and remove
    the burden of insane law suits that make it impossible for the Dr.’s to practice
    medicine without the additional cost of extra tests and procedures, just to cover
    his/her behind. Lawyers get rich and the public gets screwed.

    Family Dr.’s return and affordable care with it. We don’t need a primary Dr.
    and 5 specialists to deal with most health care issues. One, well trained Dr.
    can handle most issues.

    We all will live and die and occasionally, we need a Dr. We don’t need a
    Dr. and thousands of bureaucrats to add to the cost of medical care.
    Too simple? It just might work! It did throughout most of our history.

  18. If you plan on getting an education make sure you spend some time acquiring real life experiences maybe even assume some responsibility for yourself,otherwise you will end up like our socialist peanut and hide among all the other underachievers.

  19. If you ever plan on being old, you should run away screaming, from the Ryan plan. It achieves reductions in government healthcare expenditures by shifting the burden onto the individual.

    There is no provision for actual health cost containment, just provisions to limit the government’s role in meeting the cost obligation. This is a throwback to the social situation pre-Medicare, when we had an epidemic of senior citizens living in poverty and dying from treatable illnesses, due to lack of funds.

    You can argue that this is the natural order of things, that people should either take care of themselves or die trying. But when it’s you or someone you love, suddenly you become more open to assistance.

    The true problem is that healthcare is too expensive regardless of how the bills get paid, that individuals are not getting their money’s worth. Every developed country in the world has figured out the solution to this fundamental pillar of societal success, and its name is universal healthcare.

    Don’t think of it as socialism, that word is too loaded. Think of the whole country as a single body of employees, with ultimate bargaining power. See, we’re like a business, only the profit is the well-being of the population.

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