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I have been watching the release of the Medicare Trustees reports for many years and I have never seen anything as strange as what happened last week.

Although these reports are normally carefully embargoed, Health and Human Services Secretary Kathleen Sebelius released parts of it (the parts most consistent with the administration’s spin) several days in advance. Then Sebelius, Treasury Secretary Timothy Geithner and other trustees, all with happy faces, appeared for the formal release last Thursday, where one person was notably absent: Medicare’s chief actuary, Richard Foster.

Enterprising reporters who researched all the way to the end of the report (page 281), where Foster’s sign-off signature would normally appear, found instead a statement disowning the entire report, encouraging readers to ignore it, and diverting everyone’s attention to an alternative report prepared by the office of the Medicare actuaries.

As noted the other day at my blog, I think I can safely say this has never happened before in the history of Medicare.

So now you know why it took until August to release a report that normally appears in April. No, it wasn’t because health reform is so complicated that it took many months to figure out how it would affect Medicare. It was because an internally divided Obama administration feared the potential embarrassment of being repudiated by its own accountants!

But first things first. What the White House wants the message to be is this: The new health reform law has added 12 years to the life of Medicare’s (Part A) Trust Fund. Now unless you possess an inside-the-Beltway morbid fascination with Ponzi schemes this isn’t very interesting news. Like the Social Security trust fund, the highway trust fund and just about every other federal trust fund, Medicare’s trust fund does not hold any real assets. It only holds IOUs the government has written to itself. (For Social Security, the IOUs are pieces of paper stored in filing cabinets; for Medicare, they are all electronic.)

How many IOUs Medicare holds is one of the least important things there is to know. I believe the president, through executive order, could double and triple their number. But that’s not how the administration wants you to think. President Obama, Secretary Sebelius, Secretary Geithner and others in on the spin want you to believe that somehow the health reform act has enhanced Medicare’s ability to pay seniors’ medical bills.

And this is decidedly not the case. As the Congressional Budget Office and Richard Foster separately explained in the spring, Medicare savings can either be used to subsidize health insurance for young people, or to pay the medical bills of the elderly and the disabled — but not both!

In this regard, it may be helpful to remember why Bernie Madoff is in prison. It’s not because he wrote IOUs to himself. It’s because he pretended that money used for his own consumption was also available to pay off investors.

Perhaps one day the rules that were used to convict Madoff will also apply to federal officials.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis.  He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system. Dr. Goodman’s Health Policy Blog is considered among the top conservative health care blogs on the internet where pro-free enterprise, private sector solutions to health care problems are discussed by top health policy experts from all sides of the political spectrum.

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11 Responses for “A Bizarre Report”

  1. Doc99 says:

    I blame Bush!

  2. inchoate but earnest says:

    John was of course fine with the “unsustainable reductions in physician payment rates” Foster cites in his disclaimer when they were being implemented over multiple years during Bushco’s presidency, so the only really bizarre thing here is John’s funky hairdo.
    If John truly wants bizarre in the realm of Medicare actuaries’ analyses of legislation, he needs to go back to the handling of estimates for Medicare D’s impact.
    That the official projections are divorced from reality is certainly troubling; that Goodman wants to insinuate this is something new under the Washington sun is disingenuous – at best.

  3. Tim says:

    I see. Washington has always created cons, so…this one should not be called a con. Or, maybe you can call it a con, but not a new con. Or something.

  4. There is almost certainly political “spinning” as Dr. Goodman notes, but reading the alternative scenario prepared by Mr. Shatto and Mr. Clemens is not particularly damning to the full Trustees report.
    In the conclusion the two analysts note “…the projections shown in the 2010 Trustees Report for current law should not be interpreted as our best expectation of actual Medicare financial operations in the future but rather as illustrations of the very favorable impact of permanently slower growth in health care costs, if such slower growth can be achieved”.
    Acknowledged and understood, but projections are inherently unreliable, depend on assumptions, yet are intended to be indicators of what will likely occur if certain actions are taken now or not. An aid to decision-making in other words, not an end in themselves.
    Of course not only slower growth in costs but reductions in costs is eminently feasible and should happen, but the USA public has to put pressure on its Congressional representatives to stop lying about most issues related to the USA healthcare system and to make further reforms or take permit statutory decreases in payments at least occur to the benefit of the population rather than to the benefit of suppliers into the healthcare system.
    In the Overview section of the full report the Trustees note:
    “If Congress continues to override the statutory decreases in physicians fees, and if the reduced price increased for other health services under Medicare become unworkable and do not take effect in the long range, then Medicare spending would instead represent roughly 11.0 percent of GDP in 2084 [as opposed to the projected 6.4 percent].”
    No dodging the issue and also not letting Congress dodge this and other basic issues as most Congress members invariably do.
    Overall the full report appears to be full of useful and relevant information just as reports in prior years have been.

  5. Matthew Holt says:

    Hmmm, really John, Never happened before, Never?
    What about the gagging of the Medicare Chief actuary by Tom Scully, Bush’s Medicare chief in 2003 before the vote on Medicare Part D. What was his name? Oh yes…Richard Foster!
    Did that one slip your mind? Tough to remember all the double dealing and fake accounting in the Bush Administration, I’ll admit (two wars fought off the books, etc, etc), but at least the Obamanauts for all their faults and broken promises on certain aspects of open government at least let the man have his say.
    And of course if you agree with him you have to believe that none of the prospective cuts in Medicare in the recent bill will come true. Yet funnily enough just last month John was saying that all those cuts would lead to rationing. http://www.thehealthcareblog.com/the_health_care_blog/2010/07/how-to-ration-health-care.html
    Which John Goodman should we believe? This week’s or last?

  6. Great article John! Keep up the good work.

  7. Peter says:

    “Now unless you possess an inside-the-Beltway morbid fascination with Ponzi schemes this isn’t very interesting news.”
    Would that be the same as Wall Street’s morbid fasination with it’s own taxpayer bailed out ponzi schemes?
    “President Obama, Secretary Sebelius, Secretary Geithner and others in on the spin want you to believe that somehow the health reform act has enhanced Medicare’s ability to pay seniors’ medical bills.”
    So how would Paul (and Republicans) enhance Medicare’s ability to pay seniors medical bills and not have to endure an election backlash?
    “Like the Social Security trust fund, the highway trust fund and just about every other federal trust fund, Medicare’s trust fund does not hold any real assets. It only holds IOUs the government has written to itself.”
    Whom do you blame for that? The voters who want the services but don’t support pay as you go through tax increases? The corporate lobbyists that want to make sure there’s disposeable income going their way and not to necessary government services? The politicians who get elected by local, porkbarrel hungry voters?

  8. These politicians are cunning. They have “fixed” the “doc fix” every few months for the last decade. But why? In Canada, for example, the provincial governments couldn’t care less that there is a shortage of doctors, medical technology, and capacity in hospitals. Denying people access to medical services is how they pretend to keep costs down.
    But Canadian provincial governments keep people in partial ignorance of their situation by outlawing alternatives. If law-abiding people cannot exercise options, they will not waste time learning about those options.
    In the U.S., however, Medicare beneficiaries and providers observe superior access in the private environment, so the political class cannot fool the people like it can in Canada.
    However, this is coming to an end. Even with the “doc fix”, Medicare beneficiaries are having more trouble finding doctors. Therefore, the Key Success Factor for the political class is that ObamaCare reduces everyone’s access to medical services concurrently, so the gap in access between government-insured and privately insured widens no further.
    Unless Congress repeals ObamaCare, we will see that “doc fixes” will eventually become a thing of the past, IMHO.

  9. Peter says:

    “In Canada, for example, the provincial governments couldn’t care less that there is a shortage of doctors, medical technology, and capacity in hospitals. Denying people access to medical services is how they pretend to keep costs down.”
    Yes, in Canada they’re herding voters with whips and cattle prods. And here of course the doc shortage started with “Obamacare”.
    http://www.nytimes.com/2009/04/27/health/policy/27care.html

  10. Nate says:

    “The voters who want the services but don’t support pay as you go through tax increases?”
    And when the taxes hit 100% peter then what? Or do you now worry about that fact since it is 60-70 years away, let your granskids suffer through the consiquences? Extrapolate your tax increase answer for everything out and share with us how it ends when you can’t increase taxes any more. I’ll even let you pretend “rich” people will stick around and keep working when their tax rate is 70%

  11. More than 30 years ago I had dinner with a respected acupuncturist who told me a story. It did not matter to me whether he was right or not I got his message. He said medicine in his area, Asia, long ago was very much like what we have now, referring to the USA. But eventually the cost grew so great it broke the country. The people rebelled and went to their leaders telling them they would no longer pay doctors when they were sick from now on they would only pay them when they were well. As illness set in the payments would stop. As a result a new medical model developed where prevention became the goal and costs went down because it is easier and cheaper to prevent ill health than correct it. You get the idea and such an ideal would be hard to approach today yet maybe it is a good time to rethink things. The politicians will not find the solutions they will come from the people.

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