Monday, July 04, 2011







Did He Really Say That?

No, not Barack Obama, in whom it is difficult to be disappointed anymore, the President long ago having abandoned any modicum of progressive/liberal economic policy. The New York Times informs us

Obama Administration officials are offering to cut tens of billions of dollars from Medicare and Medicaid in negotiations to reduce the federal budget deficit, but the depth of the cuts depends on whether Republicans are willing to accept any increases in tax revenues....

Before the talks led by Vice President Joseph R. Biden Jr.. broke off 12 days ago, negotiators said, they had reached substantial agreement on many cuts in the growth of Medicare, which provides care to people 65 and older, and Medicaid, which covers lower-income people. Those proposals are still on the table when Congress reconvenes this week, aides said, and are serious options that Democrats could accept in exchange for Republican concessions that raise revenues.

In mid-June, some liberals were relieved when the third-ranking Democrat in the Senate, New York's Charles Schumer, asserted

We want to make our position on Medicare perfectly clear: No matter what we do in these debt limit talks, we must preserve the program in its current form, and we will not allow cuts to seniors' benefits.

It was at least somewhat reassuring that cuts in Medicare benefits apparently were not being pursued by high-ranking Democratic officials. Now, the Times reports, the changes to the Medicare program being considered by Administration officials and legislators are:

¶ Gradually eliminate Medicare payments to hospitals for bad debts that result when beneficiaries fail to pay deductibles and co-payments. Medicare reimburses hospitals for 70 percent of such debts after the hospitals make reasonable efforts to collect the unpaid amounts.

¶ Reduce Medicare payments to teaching hospitals for the costs of training doctors, caring for sicker patients and providing specialized services like trauma care and organ transplants. Medicare spends $9.5 billion a year for its share of those costs.

¶ Reduce the federal share of payments to health care providers treating low-income people under Medicaid and the Children's Health Insurance Program. The administration wants to establish a single “blended rate” for each state. The federal government now reimburses states at different rates for different groups of people and different services in the two programs.

The excuse is starting to become clear. Schumer recently stated "We are very willing to entertain savings in Medicare. Medicare gives very good health care very inefficiently."

Medicare gives very good health care very inefficiently. Yes, compared to Finland, Italy, Ireland, Japan and every other OECD country, health care in the U.S.A. generally is delivered less efficiently, and that probably also applies to government-provided health care (Medicare, Medicaid, VA) .

But compared to private health insurance in this nation, hardly. As the chart below (from Centers for Medicare and Medicaid Services, by way of Ezra Klein) illustrates, Medicare (and Medicaid) spending is lower per capita than that of private insurance and has been growing more slowly over the past 20 years.






There may be no better symbol of the Democratic establishment than Chuck Schumer. The President is focused on the independent vote, which he believes obtainable throught pragmatism untethered to principle; Senate Majority Leader (Reid) is center-right; the Senate Whip (Durbin) is caught between his staunchly liberal instincts and that President. The House Minority Leader (Pelosi) is, well, a Democrat in a party with very few. Schumer, though, is a reliable liberal except when the interests of his major constituent- Wall Street- is involved. And when Charles Schumer advocates "savings in Medicare," citing imaginary inefficiency, that is where the Administration is heading.


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