Thursday, October 15, 2009

Talking Point vs Reality: Health Care Reform's Effect on Medicare

cross posted at Angry Bear

The latest Republican talking point, promoted among others by Chuck Grassley this morning, is that proposed cuts to Medicare make its financial situation more precarious. Why cut $500 billion if Medicare is already in trouble? This is totally backwards and shows a total unawareness of how Medicare is financed. So lets review:

Medicare has four 'Parts' A (Hospital), B (Physicians), C (Medicare Advantage) and D (Drugs).

Part A is financed primarily by a tax on payroll supplemented by co-pays for extended stays. Tax receipts not needed for immediate payout are deposited in the HI (Hospital Insurance) Trust Fund which like its counterparts in Social Security functions as a reserve fund, serving to buffer out fluctuations in tax income.

Parts B & D are financed by a combination of premiums and direct transfers from the General Fund, while Part C being a combination of A, B, and D draws from all three sources and is run by insurance companies.

The Health Care bills under consideration leave current revenues into Medicare alone and so CAN'T worsen the overall financial health of the system. Instead they propose to change the payment mix going out and slash the extra premium going to Part C and so make the overall financial position BETTER. These changes actually move the date the HI Trust Fund is projected to go to depletion OUT IN TIME.

Now it is fair to argue that cuts in Medicare potentially deprive people on Medicare benefits they have come accustomed to, but the argument that they financially weaken Medicare is to get it 180 degrees reversed. Republicans have been bleating about an 'entitlements crisis' whose costs are out of control. Well the answer to that is to cut costs. The only difference is that Democrats propose to use the savings to extend coverage to the uninsured while Republicans were hoping to use them to preserve tax cuts.

So don't buy the "We are trying to save Medicare" argument from the Republicans, they don't like it, never have, and don't care in principle about cutting money going to gramma. Instead all of this, all of it is about wanting Obama and the Democrats to fail so that Republicans can make gains in the 2010 mid-terms. Pay no attention to the crocodile tears.


run75441 said...

Hi Bruce:

I posted an answer to Buff on the last page of your article's comments on Angry Bear which you may find interesting. If not my answer :) then the citing from the Urban Institute "The Cost of Failure to Reform Heathcare" It is pretty recen tand not many people have seen it yet.


Tom Degan's Daily Rant said...

My younger brother Jeff is the shame of the Degan family. He not only lives in France, he actually likes it there. He has a French wife and two gorgeous little French daughters. Honestly I think the guy is a closet commie. Back in August, in a letter to his fellow countrymen and women regarding health care, he ended it by saying:

"In short, in the US, you pay more, get less, and die younger than we do in Europe. What part of that don't you understand?"

Well, hey there! That's a danged good question! What part of that don't we understand? Why is it that so many of us have to be dragged, kicking and screaming like half-witted little preschoolers, into the brave new world of change? What the hell is the matter with us anyway? How can it be that such a huge number of Americans cheerfully join movements of mass stupidity and salivate on cue to the sound of Dr. Glenn "Pavlov" Beck's bell? It kind of makes you wonder, huh?

Tom Degan
Goshen, NY

Bruce Webb said...

Well the answer might be in the post by Gavin Kennedy he invited me to cross post above.

Quite apart from the Beckian ranters there are people who trace the concept of LIberty quite explicitly to that of Private Property and who find the whole mind-set embedded in Liberte, Equalite, Fraternite just as revolutionary today as it was in 1789.