Creating the Appearance of Paying for Medicare Long Term

[Christopher]

It seems many politicians are fine with just creating the appearance that the recently passed reform bill will provide enough funds for Medicare benefits down the road. Here is what the Obama administration promises on health care reform regarding Medicare. From here: Frequently Asked Questions about Health Insurance Reform | Health Insurance Reform Reality Check

Most importantly, by reducing waste and improving the efficiency of Medicare, the Administration will strengthen the program to be sure it is always there for you and the generations to come. As you know, the Medicare Trust fund is projected to run out of money in about 8 years. Health insurance reform would extend the life of the fund for additional years—through at least 2022—and give it greater stability and security.

Now, here is what the CBO said after they analyzed the effects of the Patient Protection and Affordable Care Act (PPACA) just before Christmas. This is from their report on the effect of this act on the HI trust fund which is the accounting mechanism through which the government pays for Medicare Part A http://www.cbo.gov/ftpdocs/108xx/doc10868/12-23-Trust_Fund_Accounting.pdf

CBO has not undertaken a comparable quantitative analysis for the PPACA incorporating the manager’s amendment, but the results would be qualitatively similar. The reductions in projected Part A outlays and increases in projected HI revenues would significantly raise balances in the HI trust fund and create the appearance that significant additional resources had been set aside to pay for future Medicare benefits. However, the additional savings by the government as a whole—which represent the true increase in the ability to pay for future Medicare benefits or other programs—would be a good deal smaller.

Note the words in bold. Here is the main point from the CBO:

The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.

So, as long as they shuffle the numbers around and make it appear as though they are going to be able to keep funding Medicare in the future with health reform, that’s fine right?

 

[chanel]

I must admit I don't totally understand how that will work, but it sounds like another bait and switch which this administration is becoming famous for. What the CBO could not project as well is the effect of 20 million illegals on Medicaid/Medicare which will happen as soon as they push amnesty through.

And who will pick the tomatoes when they are all on the govt teat? But I digress...

 

[Christopher]

I must admit I don't totally understand how that will work, but it sounds like another bait and switch which this administration is becoming famous for. What the CBO could not project as well is the effect of 20 million illegals on Medicaid/Medicare which will happen as soon as they push amnesty through.

And who will pick the tomatoes when they are all on the govt teat? But I digress...

I think that is the point. They do not want us to really understand it. It is just another way to shuffle money around. Such as how they are going to reduce some premiums people pay yet not really decrease overall health care costs.