Busting the Medicare “Crisis” Myth

1. A Reality-Based Look Jim LukeProfessor of EconomicsLansing Community CollegeJan 23, 2013 http://econproph.com Busting the Medicare “Crisis” Myth

2. “Entitlements like, socialsecuritymedicareandmedicaid are busting the budget.” “WE HAVE TO……DO SOMETHING SERIOUS!…CUT BENEFITS! ..PRIVATIZE! …VOUCHERS! …THROW GRANDMA FROM THE TRAIN! AND NOW!” “We are mortgaging our grandchildren’s future.” We are constantly told that:

3. The U.S. budget deficit is rising and out of control.

4. Budget deficit is shrinking, manageable, and no crisis exists.

5. Budget deficit is shrinking.

6. Medicare will be bankrupt and we must act NOW.

8. Part B (SMI) and D (Rx) are funded annually from general fund.“Bankruptcy” is a meaningless term. Can Pentagon go bankrupt?

9. Part A (HI) could become “insolvent” but not “bankrupt”. • Part A (HI) has • trust fund • dedicated payroll tax. • General fund taxes are off-limits • If payroll tax is too little, then bfts reduced.

10. HI (Part A) Is As Healthy As Ever.

11. Medicare costs are growingout of control.

13. Growth in Medicare $/beneficiary has slowed dramatically.

15. Private insurance & competition is more efficient than government-run Medicare.

16. Private Health Insurance Admin Costs are 4-6x higher than Medicare

18. U.S. Healthcare costs are risingbut at a slowing rate.

20. US: $7,538 /person/year 2.5 x OECD average Higher prices Higher usage per person We spend more than others…

21. But we get less.

24. U.S. has a Healthcare System problem. Medicare is part of the solution.is will be bankrupt.

25. Jim LukeProfessor of EconomicsLansing Community CollegeJan 23, 2013http://econproph.comjol2@plansolutions.com

26. Backup Slides for questions

27. Private insurance is increasingly less efficient than Medicare

28. Medicare & Medicaid Control Prices Better Than Private

29. Medicare controls costs better. • For common benefits, Medicare spending rose by an average of 4.3 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.5 percent per year. • Karen Ignagni, head of America’s Health Insurance Plans (AHIP), the insurance industry’s trade association, has admitted that private plans cannot bargain down provider costs and has asked Washington to intervene. Source: healthaffairs.org and others

30. Deficit as % of GDP is OK.

31. Raising Eligibility Age is an Incredibly Bad Idea • Raise age from 65 to 67: • Save $3.7b / year (Fed Gov) • Cost $11.4b / year (seniors, states, employers, and Medicaid) • http://theincidentaleconomist.com/wordpress/raising-the-medicare-eligibility-age-is-now-a-really-bad-idea/ • http://theincidentaleconomist.com/wordpress/monkeying-with-the-medicare-eligibility-age/