Hypothetical Mean

Commentary from an Actuarial and Economic Perspective

Why oh why can’t we have a better press corps? Medicare Edition

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I have been very disappointed in the press coverage of HR 6331 — the Medicare Improvements Act recently passed over Bush’s veto. (CBO scoring) The storyline is that physician payments will not be cut, with the funding coming from cuts in Medicare Advantage plans. This is woefully incomplete.

Additional storylines that should have received greater coverage:

1) What is the Medicare Improvement Fund? It is the single largest expenditure item in this bill, topping out at close to $25 billion. It is to receive disbursements from the HI and SMI Trust funds beginning in 2014. Despite this fact, it has gone unmentioned in every article on the bill, and is not mentioned in the Baucus’ bill summary.  I’ll cover this item in a future post.

2) What is the impact of this bill on senior payments? Seniors will bear the largest burden of this bill through increased premiums and increased coinsurance amounts. How large are these increases expected to be? Again, I’ll address this in  a future post.

3) What is the impact of this bill on Medicare solvency? Is this bill solvency neutral? I am concerned that it is not.

4) What is the impact of this bill on the deficit? For 2008-2009, this bill increases payments to physicians; for 2009-2010, this bill increases payments to Medicare Advantage plans; through 2011, the CBO estimates that this bill will increase the deficit by more than $12b. This bill is “paid for” by long-run changes to the Medicare Advantage program, only some of which are traditional spending “cuts”. Therefore, this bill pays for short-run, certain payments with long-run, uncertain offsets. In what sense is this “paid for”?


Written by Victor

July 20, 2008 at 8:11 pm

Posted in Healthcare, Medicare

Tagged with ,

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