Medicare and the new voodoo economics

The new voodoo economics is the claim that because we can (will?) make cuts in Medicare spending, we can afford to spend lots of money elsewhere.  I explain this in my latest column.  Excerpt:

Drawing upon the ideas of the Harvard economist David Cutler, the
Obama administration talks of empowering an independent board of
experts to judge the comparative effectiveness of health care
expenditures; the goal is to limit or withdraw Medicare support for
ineffective ones. This idea is long overdue, and the critics who
contend that it amounts to “rationing” or “the government telling you
which medical treatments you can have” are missing the point. The
motivating idea is the old conservative chestnut that not every
private-sector expenditure deserves a government subsidy.

this principle is radical in its implications and has met with
resistance. In particular, Congress has not been willing to give up its
power over what is perhaps the government’s single most important
program, nor should we expect such a surrender of power in the future.
There is already a Medicare Advisory Payment Commission, but it isn’t
allowed to actually cut costs.

Obama, to his credit, has very recently proposed to change this.  But will the fiscal story have a happy ending?  Probably not:

If we are willing to take comparative-effectiveness studies
seriously, we could make significant cuts in Medicare costs right now.
We could cut some reimbursement rates, limit coverage for some of the
more speculative treatments, like some forms of knee and back surgery,
and place more limits on end-of-life-care.

Those cuts alone will
not solve the fiscal problem, but if we aren’t willing to take even
limited steps to conserve resources, we shouldn’t be spending any more
money elsewhere.

Of course, we have not made such Medicare spending cuts yet, and there are few signs that we will. A Kaiser Family Foundation poll
found that 67 percent of Americans believe that they do not receive
enough treatment and that only 16 percent believe that they have
received unnecessary care. If the Obama administration covers more
people with government-supplied or government-subsidized insurance, the
political support will broaden for generous benefits, their
continuation and, indeed, expansion of current expenditures.

Read the whole thing.


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