Fixing Medicare - NYT
There is no way to wrestle down the deficit without reining in Medicare costs. Ensuring that the program provides quality health care coverage to millions of older and disabled Americans is essential. These goals are not incompatible, but they require a judicious approach to policy making that is depressingly absent in Washington.
Medicare is nothing less than a lifeline for 49 million older and disabled Americans. It helps pay for care in a wide range of settings, including hospitals, nursing homes, outpatient clinics, doctors’ offices, hospices and at home, as well as for prescription drugs.
It is also hugely costly. The federal government spent about $477 billion in net Medicare outlays in fiscal year 2011 — 13 percent of its total spending. By 2021, it is projected to spend $864 billion — or 16 percent of the total — according to figures derived by the Kaiser Family Foundation. That rate of growth is not sustainable indefinitely.
Unfortunately, many politicians seem less interested in coming up with ways to fix Medicare than in how they might impose their ideology on the program or leverage the issue for their next political campaign. Members of both parties need to define more clearly for the public what Medicare’s true problems are and how they propose to address them. Here are some of the major issues:
NEAR-TERM COSTS There are three key drivers of Medicare spending: the spiraling cost of all health care as new technologies and treatments are developed; much greater use of medical services by the typical beneficiary; and an aging population. By 2020, the number of enrollees will increase to 64 million.
The current rancorous debate in Washington is focused on finding big immediate cuts to slow Medicare spending. We are skeptical that this can be done quickly without wreaking major havoc.
The health care reform law enacted last year calls for cutting more than $400 billion from Medicare over the next decade, primarily by slowing the rate of growth in payments to health care providers and phasing out unjustified subsidies to private Medicare Advantage plans that insure roughly a quarter of all enrollees. Republican leaders, who denounced those cuts in 2010, have since embraced Representative Paul Ryan’s proposal, which adopts virtually all of the same reductions. Even these will be difficult to achieve without driving out providers, according to the government’s nonpartisan budget analysts.
There is time to get this right. Since January 2010 the growth in Medicare spending has actually slowed to an annual rate of about 4 percent, less than half the annual rate for the previous decade. No one is quite sure why, but one theory holds that hospitals are scrambling to squeeze a lot of fat out of the system even before the health care reforms pressure them to do it.