CBO on Medicare – “We need a Death Panel”

Doug Elmendorf over at the CBO gave a speech this morning on Medicare. I think he gave us a window into what is coming. He outlined a number of measures that would help to put Medicare on firmer footing.

The federal government will spent north of $1 trillion in 2011 for health care (7% of total GDP!). Half of that will go to Medicare. That’s a bad result. But it is nothing compared to what will happen in the coming decade. The cost of all medical treatment will rise substantially above Mr. Bernanke’s measurement of inflation and there will be many more people on the Medicare line due to the rapidly aging population. So what does Doug suggest?

Cut payments to Medicare providers for services they provide. There have already been cuts made. But they are temporary. Elmendorf wants more. This makes sense. Cutting payments to Dr’s, hospitals and service providers like nursing homes would make a big difference on the financial side. It would also make a big difference to Granny in that nursing home. It’s worth noting that Elmendorf doesn’t think this is likely to happen:

Whether the reductions will be sustained over a long period of time remains to be seen.

Another suggestion is to extend the eligibility schedule for Medicare from 65 to 67. I am quite certain this will happen. The only question is how soon it will happen. Some smart fellow will do an analysis on the proposal and conclude “It will save us X dollars, but Y people will die as a result”. The X in this calculation will be big. The Y will also be big.

This recommendation will strike a dagger at the Administration and all those Dems who supported Obamacare:

Reverse the expansion of Medicaid and the subsidies for purchasing insurance that were enacted in last year’s legislation.

The suggestion is that we will have Universal Health Care “Lite”. It also implies that Obamacare comes up for some redrafting. If they start messing with this it will be the death of it. (Politically this would suit the Republicans and Tea Party set-ergo look for it to happen)

A separate suggestion is to treat employer contributions to health insurance as income and tax it accordingly. This is just a tax increase for workers. It will go over like a lead balloon. But we need to remember that this concept is already part of the current law. It was part of the Obamacare stealth tax increases. These tax increase are scheduled to go into effect in 2018. This could happen much sooner according to Elmendorf:

Last year’s legislation changed the tax treatment of employer-sponsored health insurance, but only in 2018 and beyond. That provision could be accelerated and strengthened.

The most significant recommendation (to me) is the suggestion that Medicare will not cover new treatments under some circumstances. This is the Death Panel concept of rationing health care that everyone has been taking about.

Currently, Medicare pays the costs of nearly any medical treatment or procedure that a doctor recommends. An alternative would be for Medicare to pay only the cost of existing ways of dealing with a specific health problem

I was surprised that Elmendorf made it clear that if someone on Medicare had the money to pay for the better, newer treatments they could do it. But they had to shell out of their pocket. In this plan, what happens to those who don’t have that money? Easy, they die or get inferior treatment.

Under such an approach, patients would be able to use their own money to pay for the more-expensive care, but the federal government would not pay more

Elmendorf acknowledges the difficulty in making the choices of which treatments are covered and which are not:

It would be an immense challenge to formally classify treatments and procedures into sets that address the same health problems and to evaluate whether some treatments and procedures are better for some or all patients.

Yes Doug, it will be an “immense challenge” to come up with that list. But that list is coming. And again, as a result of the list, some will die.

We have to make hard choices. Ones that will result in suboptimal health care and yes, premature death. It’s good that the CBO put this on the table. It’s still not easy to read. Anyone who says that America is such a wealthy country ought to look at it. We’re not as rich as we’d like to think we are.