As most of us raise a sigh of relief that the debt ceiling was raised and a vague compromise to trim $1.2 trillion of the national debt was reached, we should not assume that all government spending will be trimmed equally. The social safety net weaved by Social Security and Medicare remains the most conspicuous target for cutting. What to be wary of is how the cuts are going to be presented, argues Trudy Lieberman of Time Magazine. What may look good in the headlines is likely to sting older Americans in practice.
No one doubts that health-care costs will continue to rise quicker than inflation over the next two-to-three decades. Though why they will rise is a contentious issue. The nonpartisan Government Accounting Office argues that the health-care overhaul achieved by President Obama in 2010 will raise costs slightly for the first few years, but that savings will begin to accrue by 2020.
The real problem is a classic economic one: as the Baby Boomers retire, begin to collect Social Security, and seek out the health care that older people tend to need, the demand for care will rise faster than the supply. Thus the price for that care will rise as well. The government study predicts a bill of $4.6 trillion by 2020, with government Medicare plans paying for just over half of it (these plans now pay about 44%). Unfortunately, paying more for health care hasthan those in other (post)-industrial nations with wider coverage for more people.
So as the political debate over healthcare revamps for the 2012 elections, Ms. Lieberman warns of some catch phrases that carry quite an economic punch to those on Medicare, and we encourage you to read her list. The one we want to call attention to here is the so-called “Medicare benefit simplification” plan forwarded by (CT and no relation to Trudy), an ‘independent’ candidate who worked hard to end discussion of a single-payer plan in 2010 as most of his constituents are insurance-industry lobbyists.
wants to raise the deductibles on all Medicare recipients, especially wealthier ones, and give them all the opportunity to leave the program for private insurance if they so choose. But the most likely scenario will be that the wealthier will opt-out altogether, leaving the poorer – and likelier sickly – to fight for the scraps of Medicare, all while paying more anyway.
According to Ms. Lieberman, If the single deductible sounds like a great idea, think again, advises Joe Baker, who heads the Medicare Rights Center, a New York advocacy group. It would raise out-of-pocket costs for millions of beneficiaries who don’t use hospital services during the year, he says. Nearly all seniors, though, go to the doctor, and they would pay $550 instead of the $162 they pay now.”
So, while Congresspeople congratulate themselves for releasing the debt-ceiling hostage they held at gunpoint for three months, keep an ear open for their discussion of how they want to improve Medicare by ‘simplifying’ it. Rather like they are ‘simplifying’ the work of the Federal Aviation Administration by not getting around to reauthorizing it, thus allowing billions in revenues to slip past the Treasury and tens of thousands of FAA staff to take a forced month-long furlough.
When unemployment numbers for August come out, note which Congressional presidential candidates blame President Obama for that one.