Denial

[Doc91678]

By John C. Goodman
February 9, 2013


There was a time, not long ago, when both Republicans and Democrats agreed that something had to be done about entitlement spending — especially spending on the elderly. But no longer.

• Although he promised in his first run for the presidency to reform Social Security, Medicare and Medicaid, Barack Obama seems increasingly unwilling to do any of that now.
• The leftwing of the Democratic Party seems increasingly shrill in its insistence that there is no need for any fundamental reform of entitlement spending.

• Even in the left-of-center think tanks and on the liberal blogs, one finds increasing denial that any fundamental change is needed.

This last development is especially disappointing. Tyler Cowen writes:

I see the current American Left as rapidly losing what it once knew about the need for entitlement reform. This is a shame, it does not augur well for our fiscal future, and it remains an under-reported story. I see it happening right under my nose, day by day, article by article, blog post by blog post.

Our budget problem should not be a mystery. Basically, spending on government entitlement programs has been growing at almost twice the rate of growth of our national income for the past 40 years. Health care entitlements have been growing more than twice that fast. Entitlement spending is already more than half of the federal budget and soon it will be more than half of all government spending — including state and local governments.


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Denial - John C. Goodman - Page 1

 

[Clementine]

Entitlement spending is over half the spending. We're halfway to socialism.

 

[jwoodie]

All the Left cares about is power. Ironically, they might be willing to solve some of our problems if we would assure them that they could stay in power. Would that be worth it?

 

[Charles_Main]

All the Left cares about is power. Ironically, they might be willing to solve some of our problems if we would assure them that they could stay in power. Would that be worth it?

Don't fool yourself, all either side really cares about is Power. That is why were in this mess.

 

[RosieS]

And as the Baby Boomers die off such entitlements will no longer be a problem. The obesity epidemic should help in that regard.

If the monies that were "borrowed" from Social Security were put back in it would not be any problem now.

Regards from Rosie

 

[jwoodie]

All the Left cares about is power. Ironically, they might be willing to solve some of our problems if we would assure them that they could stay in power. Would that be worth it?

Don't fool yourself, all either side really cares about is Power. That is why were in this mess.

Nice sounding platitude, but not born out by recent history. The GOP abhors rapists and child molesters, while the Dems embrace them. Do you really need examples?

On a strictly political level, Bush was criticized for being bull-headed and ignoring polls, while Obama is celebrated for basing every decision on gaining political advantage.

 

[Greenbeard]

Perhaps John hasn't read the news in a few years.

Medicare's per capita spending growth last year was 0.4%: Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows

Exhibit 2. Projected and Historical Annual Growth Rates of Medicare Spending Per Beneficiary In Excess of GDP

The slow growth in spending per beneficiary from 2010 to 2012 combined with the projections of spending growth at GDP+0 for 2012-2022 is unprecedented in the history of the Medicare program.

This isn't out of the blue, the continued slow growth in Medicare has continued to surprise the CBO so much that each time they update the budget outlook they have to revise their Medicare projections downward. In the "Budget and Economic Outlook: Fiscal Years 2013 to 2023" released this week by the CBO they've revised those projections down again (i.e. down from the downward revisions they just made last August) to the point that in 2020 Medicare's spending projections are 15% lower than those projections were back in 2010.

Medicaid and Medicare. In recent years, health care spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated. (For example, in 2012, federal spending for Medicare and Medicaid was about 5 percent below the amount that CBO had projected in March 2010.) In response to that slowdown, over the past several years, CBO has made a series of downward technical adjustments to its projections of spending for Medicaid and Medicare. From the March 2010 baseline to the current baseline, such technical revisions have lowered estimates of federal spending for the two programs in 2020 by about $200 billion—by $126 billion for Medicare and by $78 billion for Medicaid, or by roughly 15 percent for each program.

Standard & Poor's Medicare indices have remained historically low as well, of course:

The reality is that the calls for "structural change" in Medicare are at best proposals aimed at achieving what's already being achieved. A point that didn't go unnoticed by Holahan and McMorrow in "Medicare, Medicaid and the Deficit Debate" last spring:

In the debate over the federal deficit, however, many have argued for the need for entitlement reforms to further reduce the rate of growth of spending on Medicare and Medicaid. Some proposals involve modest adjustments to the existing programs, but others call for more fundamental restructuring. A Medicare premium support program, for instance, would use federal funds to provide seniors with a voucher to purchase coverage in the private market; in some proposals, beneficiaries would continue to have traditional Medicare as a choice. Savings are achieved over time assuming that private insurance premiums are less expensive than Medicare and grow more slowly. This paper shows that any premium support program that accounted for the underlying enrollment growth projected for the Medicare program would have a hard time doing better than the current program at controlling spending growth. Proponents have suggested that the level of subsidies or vouchers would increase by at least the growth in GDP per capita or GDP per capita plus 1 percent.36 But if the goal is to have Medicare spending per enrollee grow at the rate of GDP per capita, the projections by both CMS and CBO suggest that this will be achieved in the coming decade under current law.

 

[jwoodie]

So we are not going broke quite as fast as forecast in 2010? Whew, what a relief! I guess we don't have to worry about that $20 trillion deficit, either?

 

[Clementine]

All the Left cares about is power. Ironically, they might be willing to solve some of our problems if we would assure them that they could stay in power. Would that be worth it?

Considering what their solutions are, NO, it wouldn't be worth it.