End Medicare -- Today It’s a Punch Line, But Tomorrow . . .

by Andrew C. McCarthy

My jaw hit the floor while reading the Wall Street Journal’s excellent editorial this morning on the tattered state of Medicare. The Journal recounts the latest insanity: The spending cut provision in the debt-ceiling deal. It immunizes the program’s swelling millions of beneficiaries from cuts and cost-sharing. Instead, any purported Medicare slashing from the across-the-board $1.2 trillion in cuts (once the vaunted Super Committee deadlocks) is to be borne — again, purportedly — by providers.

The editors demonstrate that this is a racket (I’d call it a racket within a racket). Medicare reimbursement rates are already so low that providers are squeezed to the breaking point. Beltway politicians always claim, on paper, that they are going to control health-care costs without hurting beneficiaries by such artifices as the “sustainable growth rate” imposed on physicians fees and “productivity adjustments” to inpatient treatment. But at the eleventh hour they reverse themselves by enacting “doc fixes” and the like — just as they knew they would do all along.

The effect is to keep off the government’s books expenditures Congress and the White House know they are eventually going to pay, hoping no one will notice there are no real savings. If they don’t do the next doc fix, physician payments will be cut by nearly 30 percent in January — not gonna happen. Meantime, by applying a 1.1 percent reduction formula that keeps inpatient costs artificially low, Medicare rates will soon drop below Medicaid rates — and, as the editors remind us, many providers already refuse to accept Medicaid because of the prohibitively low reimbursements. Moreover, Medicare’s unfunded liabilities run into so many trillions that they now amount to $353,350 per American household.  

None of this is news, of course, but it’s always ugly to review the cold, hard numbers. The jaw-dropping part, though, was to read this passage:

At this point the only thing left to do is end Medicare not “as we know it,” but altogether. On paper, that would zero out $7.67 trillion in obligations from 2012 to 2021 and more than erase the $6.74 trillion in deficits that the Congressional Budget Office projects over the same period.

Finally, I said to myself, a Journal after my own heart! But alas, the editors are only joking. The point of the quip is that if lawmakers are going to play this sort of Enronesque bookkeeping game, they might as well go big: Pretend that they’re not going to fund Medicare at all, then override this “cut” every few months, like they do with the doc fix. In the interim, we can make believe we have slashed spending by almost $7 trillion. (And why not, since both Democrats and Republicans are now pretending that adding $7 trillion to the national debt is actually a $2.5 trillion cut?)

Even if the Journal’s editors were joking about having to end this unsustainable, multi-trillion dollar fraud scheme, that felt they could say it out loud is progress. Ultimately, they conclude that “the only durable way to control long-run costs without hurting patients is a reform agenda akin to Paul Ryan’s ‘premium support’ plan.” On that, I’m afraid they’re dreaming as much as the budget fairies they rebuke. True, Rep. Ryan’s proposed fix is better than anything out there — indeed, Ryan is singular in acknowledging that we have a disaster on our hands. But any “reform” that leaves the government playing a central health-care role is as unsustainable as Medicare itself. As the editors note, central-planning is what got us here in the first place. They were right, however unserious they were, in saying the thing to do is end Medicare altogether.

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