Turning the Clock Back Isn’t Enough: The Nasty Surprise Awaiting the GOP...

Turning the Clock Back Isn’t Enough: The Nasty Surprise Awaiting the GOP on Health Care and the Deficit

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The Republicans who will take control of the House this January have made it clear there are two things they hate: deficits and President Obama’s healthcare reform. They’ve promised to reduce the first and repeal (or at least hobble) the second. But if you’re worried about deficits, repealing the Obama plan won’t do any good unless you’ve got a better idea. In fact, the numbers say repealing it could make the government’s budget problems worse.

Despite the outrage over spending on the Wall Street bailout, the stimulus or the Iraq war, at least these costs are temporary.  But the combination of an aging population and health costs that keep rising faster than inflation means that spending on Medicare, Medicaid and Social Security are going up – – and they’ll keep going up for years on end. With an aging population, there will be more older people eligible for these programs. The health care they need will cost more on top of it.

When people argue about the costs of an aging America, they often lump Social Security and Medicare together like they were the identical twins of public policy.  If they are twins, they’re more like the 1980s movie Twins, featuring Arnold Schwarzenegger and Danny DeVito as the world’s most improbable pair of brothers. Maybe you remember the iconic movie poster. It shows the two dressed alike, but with an enormous Schwarzenegger looming over DeVito.  In the budget world, Medicare and Social Security are both problems, but Medicare is definitely played by Arnold. Here’s why.

Health care spending has been rising faster than the inflation rate for decades. In 2007, the Consumer Price Index went up 2.8 percent, and health spending went up 6 percent. In 1997 inflation went up 2.3 percent, and health spending went up 5.4 percent.  In 1990, when inflation was 5.4 percent, health spending climbed nearly 11 percent.

That’s why Medicare is the real budget buster. The Government Accountability Office likes to explain the budget problem by talking about the $56 trillion in “unfunded liabilities,” the country faces over the next few decades, commitments the government has made to provide Social Security and Medicare for people paying into these programs now.  About $34 trillion of that is Medicare alone.

That’s a mind-boggling number. You could throw out the $700 billion Wall Street bailout, the $787 billion stimulus package, the more than $1 trillion spent on Iraq and Afghanistan, even the $4 trillion the government will take in if we let the Bush tax cuts expire, and in the long term, we’ll still be in trouble if Medicare stays as it is now.

That means – and so few people in politics will say it flat out –that the government will go broke if it doesn’t either change Medicare or the broader health care system to control costs.  That was true before the Obama plan was ever passed.

And after? Yes, the Obama plan costs more than $800 billion over the next decade to expand coverage and implement other changes. But the nonpartisan Congressional Budget Office says because the plan reduces Medicare spending, it will trim the deficit slightly over the next decade ($143 billion by 2019) and by $1 trillion or more after that. Plus, the Medicare trustees say the changes in the bill extend the life of Medicare’s trust fund by 12 years, to 2029, which is significant.

How can that be? Well, the Obama plan cuts what Medicare pays to doctors and hospitals down the line, raises some fees and taxes, and pays for research on ways to provide health care more cost-effectively.   The projections depend on Congress following through on these changes planned in the law. If it doesn’t, there obviously won’t be any savings. What’s more, the projections assume the law actually succeeds in making the health care system more efficient, such as through new research into the best ways of providing care. If that doesn’t work – – and critics, including Medicare’s own actuary, are skeptical – – Medicare will cost more than projected.

So if we just repeal the Obama plan, and don’t find another way to cut Medicare’s costs, we’re back where we started: on our way to national bankruptcy. The same is true if Republicans go through with their plan to block the various provisions in the law.  Given the way Washington often works, it would be easy – – all too easy – – for Congress to jettison the unpopular cost-cutting provisions of the Obama plan and keep the expensive (but more popular) parts that will expand and improve coverage.

In today’s hyperpartisan political climate, too many people believe it’s enough to block the other guy’s plan.  That counts as a victory. But the truth is the status quo is not an option.  And it’s not at all clear that the Republican ideas on health care, such as a voucher system for Medicare or eliminating the tax breaks to employers to provide insurance, are going to be any more popular with the public than the Democratic plan or do any more to reduce costs. The Republicans have mostly ridden the wave of “not this.” They haven’t done the hard work of preparing the public for “what now?” But “what now” on health care is the question that really matters on the budget. If we don’t answer it, a lot of the other ideas might turn out to be Band-Aids.

Scott Bittle, author of “Where Does the Money Go? Rev Ed: Your Guided Tour to the Federal Budget Crisis,” is the executive editor of Public Agenda Online and has won two Golden Quill awards for feature articles and was honored by the Philadelphia Press Association for daily newspaper writing.

Jean Johnson, co-author of “Where Does the Money Go? Rev Ed: Your Guided Tour to the Federal Budget Crisis,” is the Executive Vice President of Public Agenda, Jean Johnson has more then 20 years of experience understanding public attitudes on a broad range of issues. She has also written for various publications such as USA Today, Education Week, and the National Institute of Justice Journal.

For more information please visit  PublicAgenda.org and follow the authors on Facebook and Twitter.

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23 Comments on "Turning the Clock Back Isn’t Enough: The Nasty Surprise Awaiting the GOP on Health Care and the Deficit"


Guest

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Guest
nate
Jan 8, 2011

I’m suppose to read a 25 page piece and guess what your trying to say?
In that case Peter page three sums you up perfectly.

Guest
nate
Jan 8, 2011

and your point Peter? Any analysis or thought or you just like pointing out that people have differing opinions?
For your next homework assignment look into this;
“AHIP members, which points out that clearing the way for an untested effort such as association health plans (AHPs)”
AHPs are MEWAs and METs with a new name, they have been around since the 1960’s or even before then. There are numerous ones running all over the country now. How is a plan that is 50 years old untested, they are older then Medicare.
So Democrats were worried;
” not to mention higher insurance rates and fewer insured, are what has kept AHPs from passing Congress in the past.”
Well good things we haven’t had any increase in insurance rates and the population of uninsured has stayed steady, thanks Democrats.
Thanks for the thoughtful post Peter

Guest
Peter
Jan 8, 2011

Nate, an opinion that differs from your salivating over your own additional customer base.
http://www.ahip.org/content/default.aspx?bc=31|130|136|13958|13961

Guest
nate
Jan 7, 2011

oddly is Obamacare mostly AHPs the same thing as exchanges just under Obamacare they collect the money and we hope it comes back out?

Guest
nate
Jan 7, 2011

http://www.masoncontractors.org/newsandevents/masonryheadlines/headline.php?id=20050322082600
The House Education & the Workforce Committee on March 16th approved the Small Business Health Fairness Act (H.R. 525), a bill that will significantly expand access to health coverage for many of the 45 million Americans who are currently uninsured. The bill allows small businesses to band together through association health plans (AHPs) and provide quality health care to their workers at a lower cost. An identical measure was passed by the U.S. House of Representatives in 2004 by a vote of 252-162 with the support of 37 Democrats.
So in the house where they could push it through they did.
” The Senate on Thursday blocked legislation (S 1955) that would have allowed small businesses to join together and create association health plans, falling five votes short of the 60 votes needed to invoke cloture and limit debate, the Wall Street Journal reports. The measure was defeated in a 55-43 vote, mostly along party lines ”
Sen. Edward Kennedy (D-Mass.) said, “I think tonight we avoided taking a step backward”
I LOVE THIS ONE
Sen. Christopher Dodd (D-Conn.) said he opposed the measure because the Senate should let each individual state “decide how it can best serve its people when it comes to health care coverage”
Guess that doesn’t apply any more
The failure to pass the Enzi bill means that the week Republican leaders dubbed “Health Week” ended without any bills passing, Reuters reports (Kenen, Reuters, 5/11). The Senate on Monday voted to block two bills that would have capped noneconomic damages in medical malpractice lawsuits (Kaiser Daily Health Policy Report, 5/9). The votes on the three measures “gave Republicans an opportunity to accuse Democrats of obstructionism, while Democrats lobbed accusations at the GOP for inaction on other health issues,” according to CQ Today (CQ Today, 5/11).
I can only ask, PCP were where you from 1996-2006? Obviously not paying attention to the congress

Guest
pcp
Jan 7, 2011

“Are you saying Republicans are bad becuase they refused to blindly agree to a liberal bill they don’t think would work? Republicans were willing to pass a bill”
Republicans controlled both houses from 1996-2006 (except for two years in the Senate) and seemed VERY unwilling to expend any political capital working on health care reform.

Guest
nate
Jan 6, 2011

“The Republicans have not been willing to spend 13 months to pass a health reform bill.”
What do you mean by this? Are you saying Republicans are bad becuase they refused to blindly agree to a liberal bill they don’t think would work? Republicans were willing to pass a bill but Pelosi and Reed refused to allow them to make any amendments or have any say. Except for adding their name to a terrible bill what did you want them to do? It wasn’t the Republicans blocking debate and ideas, it was Liberals ramming their version down everyone’s throat without anyone else having any say in it at all. This is all clearly documented.
No comoanies can not sell across state lines. They can get approval in each state independent of any other state and once licensed by a particular state are subject to those State’s mandates. The way to circumvent bad state mandates us to sell a policy from another juristiction in that state, thus the term sell across state lines.
“For some reason the right does not want to take on this issue directly.”
Again another BS argument that is completly not true. How does “the Right” take on State Mandates in Massuchusetts? Your argument doesn’t make any sense unless you have a complete misunderstanding of how things work.

Guest
steve
Jan 6, 2011

@nate- I think you, at least partially, judge sincerity by a group’s willingness to expend political capital. The Republicans have not been willing to spend 13 months to pass a health reform bill. I would note that they were willing to use reconciliation to pass tax cuts.
The crossing state lines claim remains unproven as far as I am concerned. The issue is not selling across state lines. Companies can do that now. The issue is the state mandates. The state mandates need to be repealed so that cheaper products can be offered. For some reason the right does not want to take on this issue directly.
Steve

Guest
Jan 6, 2011

@Frank –
Is that ALL you got? YOU are the anonymous one here. I am entirely traceable. And, your adolescent negative potshot monikers directed at the President and others adds zero to any constructive debate here. You are a waste of bandwidth.

Guest
Frank
Jan 6, 2011

BobbyG The Anonymous Troll, your repetitive ad hominem posts here are anything BUT “adult.” Your banal characterizations of political leaders you don’t like could not be more juvenile or tiresome. Yahoo boards quality.

Guest
nate
Jan 6, 2011

“What remains are smear and obstruction. Not that I am an ACA fan, but it’s better than nothing.”
Wanted to point out one more time the Hypocrisy of rbar and liberals in general. Its well known that Pelosi blocked all republican legislation, she didn’t let anything move forward. Knowing this, hypocrits like rbar then want to claim its the republicans that obstructed things. You had a majority in the house and 60 votes in the senate, how did republicans obstruct anything? The only question is are they being dishonest or just that politically ignornt they only know what MSNBC feeds them?

Guest
nate
Jan 5, 2011

Allowing people with the means to opt out of Medicare would reduce Medicare’s liabilities, those people aren’t asking for their taxes back they just don’t want forced to be in the system. Its a no lose sitution for the public and the bankrupt trust fund to allow these people to leave but liberals are scared to death of people knowing their is an option to government nannyism. How people like rbar and steve are ignorant of these bills and discussions yet rant away is beyound me.
http://www.libertarian-logic.com/people-declined-social-security-benefits.html
Why would not feeding at the medicare troth cost me my SS benefits? What does one have to do with the other? Heavy handed liberal coercion

Guest
nate
Jan 5, 2011

Steve like this bill that the Unions and Democrats blocked for 10+ years? Simple, proven, and doesn’t require government spending, no wonder they opposed it.
“Senate Majority Leader Bill Frist (R-Tenn.) this month hopes to hold a floor vote on a revised version of a bill (S 1995) that would allow small businesses and trade associations to form association health plans across state lines,”
” The only intellectually honest right wing alternative”
or the only one rbar heard with his head buried up his…. AHPs? Vouchers? Actually address fraud? If you had any exposure to right wing dicussion instead of just listening to liberal attacks on right wing thougt you would know it goes much deeper.
H.R.3356 – Medicare Beneficiary Freedom to Choose Act of 2009
To amend title XVIII of the Social Security Act to clarify the use of private contracts by Medicare beneficiaries for professional services and to allow individuals to choose to opt out of the Medicare part A benefits.