November 2, 2012

M.D. Harmon: There's no free lunch Part 2: Medicare is unsustainable

Last week the topic was Social Security, but there's another immense federal program whose future is hanging on the outcome of the election: Medicare, which offers coverage for doctor and hospital care and prescription drugs to people 65 and older.

Last time, I noted that the phrase, "There's no such thing as a free lunch," applied to Social Security, and it applies to Medicare as well, even though liberal politicians promise that, if elected, they will "save" Medicare from changes.

Much more accurate was political humorist David Burge, who recently said, "The only thing that can kill Medicare as we know it is -- Medicare as we know it."

That is, the current program is unsustainable -- and promises "not to touch" it have already been abrogated, by the $716 billion in cuts that Obamacare contains.

Part of the situation was laid out in an Oct. 21 Washington Examiner column titled, "Twelve years left: Clock runs down on saving Medicare." As it stated, "Medicare's unfunded liabilities (now totaling $24.4 trillion above projected revenues from all sources) are unsustainable.

On average, couples that retired in 2011 paid $150,000 in Medicare taxes throughout their working lives, but (over their expected life spans) will receive more than $350,000 in benefits."

So the amount spent on care will exceed funds paid in by a declining proportion of workers in just 12 years.

Here's how the Social Security Administration put it in its most recent annual report on funding: "The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012. ... Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers."

And modifications are indeed on the way. Unfortunately, they will not strengthen the program, but instead rip hundreds of billions out of its heart.

As noted in an Oct. 16 blog post at the Heritage Foundation's website titled "Understanding Obamacare's $716 Billion in Cuts to Medicare," the Congressional Budget Office says the cuts (to take place between 2013 to 2022) are real.

They amount to $260 billion taken from hospital services, $156 billion from Medicare Advantage programs, $145 billion from payments to hospitals serving larger than average numbers of low-income patients, $66 billion from home health services, $39 billion from skilled nursing services, and $50 billion from all other services, including hospice care.

The blog says the money being deleted from Medicare will instead "pay for other new programs created under the law that aren't even for seniors. By slashing reimbursement rates instead of introducing real reform, the health law jeopardizes seniors' access to providers."

While the president has said his plan spends more money on Medicare's drug program, a column in Investor's Business Daily on Oct. 15 noted that "for every $500 that Obamacare spends on prescription drugs and preventative services, it cuts Medicare spending by $7,500."

As a consequence, Heritage said, "The Medicare actuary projects that over the next 10 years, Medicare Part A providers (hospitals and nursing homes) may stop accepting Medicare patients or 15 percent of them will become unprofitable due to the severe Obamacare cuts. If Obamacare remains on the books, the number of providers becoming unprofitable will reach 40 percent by 2050."

This, along with seniors having to leave Medicare Advantage and other plans due to reduced funding, "will guarantee access problems for senior citizens."

In addition, the unelected and nearly unaccountable Independent Payment Advisory Board (IPAB) established under Obamacare will, in just a few more years, be vested with the power "to pay physicians less and less in order to stick to an arbitrary schedule of spending cuts ... the IPAB will limit the availability of care and effectively ration services for millions of America's most vulnerable patients."

As analyst Tom Blumer said in a Sept. 20 commentary on the newsbusters.org website, "By dictating overall spending levels, IPAB will restrict care without knowing who they're doing it to, leaving the dirty work of deciding exactly who should and shouldn't receive care to hospitals and other medical providers."

But, Heritage adds, under Mitt Romney's plan, "Medicare would not change for anyone who is currently 55 or older. ..." For younger people, Romney proposes "a premium support program that puts the choice of health care coverage in the hands of seniors, not the government."

"If Medicare is the best option, future seniors will still have access to the program, but if there is a more affordable or higher quality plan in the private sector, older Americans will have the choice ... and pocket any savings."

As noted last week, Americans have a real choice next Tuesday on many issues -- but retirement and health care are right at the top of what hangs in the balance in this election.

M.D. Harmon, a retired journalist and military officer, is a freelance writer and speaker. He can be contacted at:

mdharmoncol@yahoo.com

 

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