Did Health Care Reform Cure Medicare?
By Arnold Kling
The Medicare Trustees issued a report that shows a much lower path for Medicare spending. Mark Thoma has links to two people, including Paul Krugman, who triumphantly say that this shows that health care reform has solved the long-term problems with Medicare. On the other hand, John Goodman notes,
Noting that the formal Trustees report assumes Medicare physician fees will be reduced by 30% over the next three years, Chief Actuary Richard Foster says that’s “implausible.” In addition, the Trustees report assumes Medicare fees will fall below Medicaid rates by 2019
A huge chunk of the financing for health care reform comes from reducing payments to physicians under Medicare. The Trustees’ report takes those cuts at face value, because that is what the law says. However, other experts, including the Congressional Budget Office and Medicare’s Chief Actuary, have expressed doubts that these cuts will take place, based on past experience.
Moreover, even if the Medicare cuts take place, it is double-counting to suggest that they will both save Medicare and pay for Obamacare’s health insurance subsidies. They can do one or the other, but not both.
Obamacare looks to me like the Massachusetts plan, which was supposed to save money, but did not. So I tend to think you have to be pretty gullible to believe that Obamacare will save money.
Speaking of gullibility, that is the topic of a new paper by Andrew Odylzko one of my favorite writers on economics and technology. Odlyzko interprets the late-1990’s Internet bubble and the housing/mortgage bubble in terms of gullibility, which is fine. I He claims that it is possible to track indicators in which people are becoming gullible, and there I found the paper unconvincing. But so far I have only skimmed the paper. It is part of a book that I definitely plan to read when it comes out. Thanks to Nick Schulz for the pointer.