• Cutting health spending is hard

    Sam Baker reports:

    The Medicare agency had initially proposed a 2.2 percent cut in Medicare Advantage payments. But on Monday the agency said it had scrapped that cut and would instead offer a 3 percent payment increase next year. [Other reports say 3.3%.]

    America’s Health Insurance Plans (AHIP), the industry’s top lobbying group, praised the reversal.

    Is either price the right one? Theoretically, a competitive bidding regime would obviate this question.


    • Cutting spending is indeed hard if the federal government has a stupendous capacity to borrow.

      It is natural to want to avoid the harsh conflict that arises whenever health care meets a fixed budget. Countries like Canada and Germany sometimes have more political conflict on health care than we do — because their health care must be more or less kept on a budget.

      This does not mean that we are better, just that we have soft budgets for Medicare.

      Not accidentally, our Medicaid program that involves the states runs into harsh fee cutting in many places, precisely because it runs into funding agencies that have little ability to borrow.