• How many wrongs make a right?

    If you’re looking for two different perspectives on the House Republicans’ “Pledge to America,” to be officially unveiled later today, see Ezra Klein and Avik Roy. For a concise summary of what’s in it on health care and how it relates to current law, see Igor Volsky. I want to focus on just one thing, and it isn’t really about the Pledge, though it relates to something Avik wrote in reaction to it.

    Importantly, the Pledge says almost nothing about the biggest and most difficult questions in health policy: Medicare and Medicaid reform. It criticizes PPACA’s “massive Medicare cuts” without offering an alternative solution for putting the program on stable long-term footing.

    If there is one thing I would love for all Americans to have in mind when evaluating politicians’ pronouncements about what we have done or should do with respect to government health spending it is this graph of projected federal revenue and spending as a percent of GDP, from the CBO:

    There can be no mistaking that Medicare and Medicaid spending are the major problem and that they are a big problem. Now, the content of this graph is based on a 2008 projection, which precedes the new health reform law (the ACA). The ACA will make some cuts in Medicare growth, expected to save about $416 billion dollars over ten years. Ten years of Medicare spending comes to $7 trillion dollars. So, the ACA’s reduction is about 6%. Is that “massive”?

    Well, even if one wishes to argue that a 6% cut over ten years in a runaway program is “massive,” the fact remains that massively more is needed. Of course I hope that every American could understand this, but I know that is too much to ask. I would think congressional leaders of both parties would understand this. They should. It’s their job.

    When I read that the House leadership of one party has no plan for the future of spending by public health programs and the other party has done its best and can only find a way to a 6% adjustment, I want to laugh, I probably should cry, but all I can do is shake my head. Too bad two or more wrongs don’t make a right. Really, they just make a costly mess.

    Is the graph above really so hard to understand?

    (Insert usual disclaimer about how politics impose constraints on what can be done. Nevertheless, we’ve got to at least talk as if we know what the problem is, even if we can’t solve it right now.)

    • I read the Pledge this morning. Not a single mention of cutting Medicare/Medicaid costs. I am disappointed that health care experts on the right read this and still consider it a good plan. It is clearly a guide on how to get elected, not serious policy suggestions. They also “forget” to add lots of information, especially on the discretionary spending bit. Discretionary spending is going to drop anyway as the stimulus winds down.

      The paragraph on page 15 just before the abortion clause is interesting. If they know how to incentivize insurance companies to give us lower premiums while insuring more people, eliminating caps, eliminating pre-existing clauses and all of the other goodies, I wish they would lay out that plan. Why haven’t they gone ahead and done it at the state level or when they held Congress?


    • I may be a dope but I read Medicare and Medicaid are the problem when the problem really is the cost of medical care in the US. I bet companies that locate in the US have charts that look a lot like the one above except in place of Medicare and Medicaid, they have employee health care costs. I would have felt better if this post linked to your series on the cost of care in the US.

      I haven’t had time to catch up with that series but am looking fwd to doing so over the weekend.