Political Animal


August 26, 2011 11:25 AM Medicare spending slows

By Steve Benen

There’s obviously considerable discussion about the nation’s long-term fiscal challenges, but in a practical sense, the problem is generally defined in an overly broad way. What we have is a fiscal challenge related to long-term health care costs in specific, not just long-term debt in general. As Jonathan Bernstein explained this week:

As long as health care costs (and, as the popular ages, demand for services) continue to spiral up, it’s going to create huge problems. That’s true if the problems are mainly found in government budgets, or in the private market. […]

The bottom line is that unlike a real budget problem, which could be solved by either cutting spending or raising taxes, the problem here is a broader economic problem, and it calls for a broader economic solution.

Democrats were accurately aware of this when crafting the Affordable Care Act, and it’s precisely why Dems included a variety of cost-control measures in the law.

It matters a great deal that these efforts are already starting to work.

Rick Ungar had a good piece on this last week, and Peter Orszag follows up this week, noting the efficacy of the policy thus far.

And now for some good news: Medicare spending growth has been slowing noticeably. So far this fiscal year, expenditures have actually declined slightly, according to the Congressional Budget Office. […]

We don’t yet have enough data to tell for sure what’s causing the recent deceleration in Medicare spending — or whether it will last. But some evidence suggests it may be a shift toward value in the health-care sector. Various hospital executives have told me they have already begun to prepare for less generous reimbursement from Medicare as the new federal health-care-reform law takes effect and there is a greater focus on value. They are therefore trying to become more efficient now.

The key here is controlling escalating health care costs, which are at the heart of the nation’s long-term fiscal issues. Republicans’ two favorite ideas on this front — raising the age of Medicare eligibility and/or privatizing the system through vouchers — have literally no effect on costs. They really don’t even try, and in the case of eligibility, the GOP idea would actually make the fiscal outlook worse.

The relevant provisions in the Affordable Care Act, meanwhile, address the issue the right claims to care about, but unlike the Republican proposals, actually stands a chance of working, and by some measures, already are working.

I realize this isn’t the sexiest topic in the world, but given the larger fiscal debate, this really is important stuff.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.


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  • c u n d gulag on August 26, 2011 11:32 AM:

    "Sure, Medicare spending is down.

    And we can tell you why.

    Now all we have to do is find out where Obama's hiding all of his ACA Stealth Death Panels, and we can prove it to you!"

    DEATH PANELS! BOOGA -BOOGA!!!!!!!!!!!!!!!

  • walt on August 26, 2011 11:39 AM:

    Republicans tend to see the health-care industrial complex as the "market" in which the consumer is some greedy, grasping citizen not willing to pay for what he wants. This is why their "solutions" are more about imposing more pain on the middle class. If the market is always right, the problem can never be a lack of cost controls, or bad distribution, or a lack of access. No, it's you, fellow citizen.

    Republican ideology is not particularly rigorous or thought out. It's mean, it's contemptuous of ordinary people, and it will eventually bankrupt us. Aside from that, it doesn't work as advertised.

  • bleh on August 26, 2011 11:40 AM:

    Yes, death panels, flail screech foam.

    Also sociamalist gummint interference, taking away your incandescent light bulbs and breakfast cereal. And guns.

    George Soros is probably making money off this somehow. Also Sharia, too.

  • c u n d gulag on August 26, 2011 11:51 AM:

    You keep forgetting the BLACK helicopters!

    What do you have against the black (Blackity-black-black) helicopters?

  • Another Steve on August 26, 2011 12:00 PM:

    It's only "slowing" according to your librul math-based objective reality empirical gobbledegook. Commonsense tells you that soshulist Obamacare takeover has caused it to soar and it can only be brought into check by raising the retirement age to 93 and slashing capital gains taxes to restore confidence in the markets.

  • Sam Simple on August 26, 2011 12:05 PM:

    Steve, you keep forgetting that facts don't matter to conservatives. Reality has a significant liberal bias. Global climate change is a giant liberal hoax - evolution is only a theory - cutting taxes raises government revenues - the stimulus package was a failure.

    See, it just doesn't matter what the inconvenient truth is. Republicans prefer their highly expensive, inefficient privatized health care system to "socialized medicine", even if every other country on the face of the planet has it!

  • jdb on August 26, 2011 12:58 PM:

    I'm interested in how this will be received by the progressives who are angry at President Obama. The focus of most of the comments has been on the response by the Republicans - but aren't some progressives angry about savings in Medicare? My point is that this post demonstrates that the words "Medicare" and "Savings" can be spoken together in the same sentence without hurting anyone. tIsn't it possible that the Medicare cuts that many people are freaking out over are actually already taking place as a result of ACA, and that these cuts will be recognized in some manner by the "Super Committee" when it starts looking for ways to take credit for budget cuts?

  • CDW on August 26, 2011 1:06 PM:


    That's the point, jdb. Obama has continued to call for additional and more damaging cuts to Medicare beneficiaries without waiting to see how his obamacare cuts work.

  • Anonymous on August 26, 2011 1:21 PM:

    @CDW - How do we know this? Can you point me to where the President (or some other high ranking official) has called for cuts to Medicare beneficiaries beyond savings from Obamacare?

  • Werewolf on August 26, 2011 1:38 PM:

    Teabaggers-"Kenyan/Islamoatheist/NaziCommie/deathpanels argle bargle fleen!"
    Firebaggers-"Bushe'sthirdterm/catfoodcommission argle bargle fleen!"

  • Danielle Kunkle on August 27, 2011 2:06 PM:

    Slowing the Medicare growth is hugely important. With Medicare making up approximately 23% of our federal budget, it's certain that the supercommittee will have to at least look at Medicare when considering where we can save the $1.2 trillion targeted amount of savings that the debt-ceiling deal requests the committee to find.