Cost curve bent
by David Atkins
Why do we need to cut Medicare again?
Sarah Kliff has details:
The reason for that yawning difference: Health-care costs growth has seen a steep decline over the past few years. Instead of outpacing the rest of the economy, it has grown at the exact same rate.
If that cost growth persists, it could make all the difference for Medicare: The entitlement program would, by 2085, make up 4 percent of the economy instead of the previously projected 7 percent.
The “if” there is crucial: We don’t know whether this cost growth slowdown is permanent or temporary, a factor of Americans cutting back on care during the recession.
This report presents some evidence to believe that the downturn could be here to stay. It includes data on the level of hospital readmissions for Medicare patients. These are typically considered a sign of unnecessary, costly care — patients don’t usually return to the hospital because they’re feeling in top shape.
Outside of general economic performance, healthcare costs remain the biggest driver of the deficit. The ACA for all its warts is an attempt to drive down those costs while expanding access. It appears to be working already to a certain extent.
As America moves inexorably toward more universal coverage, those costs will continue to come down even as outcomes improve. That will make Medicare more solvent until it eventually merges with or becomes a universal program. And that will happen sooner or later. America has been slower to get on board with universal health insurance than other countries, but the direction of public policy over the last half century is clear. It's not as if the country is getting any more conservative, either, in terms of policy preferences.
All of which is to point out that even though it's in worse fiscal shape than Social Security or Medicaid, not even Medicare need be cut at this point. Whatever problems exist with it can and should be fixed in a progressive way, not a regressive one.
.