On Containing Costs, Medicare IS the Problem
Ways and Means Ranking Member Sander Levin wrote an op-ed arguing that “when it comes to rising health costs, Medicare is part of the solution, not the problem…Medicare can be the driver of innovation due to its sheer market share.”
This is a nice talking point – but a totally inaccurate one, because there is sizable evidence to suggest that Medicare – which led to the widespread use of fee-for-service medicine – has actually served as a driver of rising health cost trends. Amy Finklestein’s landmark 2006 study concluded that third-party payment – led by the Medicare entitlement – could explain half of the trend of rising costs from 1950 through 1990. And the Congressional Budget Office in June 2010 concluded that over more than thirty years (1975-2008), excess cost growth was higher within the Medicare program than in all other categories of health spending.
As a reminder, Medicare is ALREADY contributing to budget deficits. According to the Medicare trustees report, the Medicare Hospital Insurance Trust Fund suffered its greatest deficit EVER this past year. Over the four years of the Obama Administration, Medicare is projected to lose a whopping $104.5 billion – and the program is NEVER projected to return to balance.
Moreover, Rep. Levin is begging the real question when it comes to Democrats’ controversial health care law. If the law’s supporters intend for Medicare to drive the health care innovations of the future, then that by definition means Medicare is the root cause of our current health system difficulties. It therefore also means that Democrats need to explain why government, having caused many of the structural problems plaguing our health care system, can now create a solution in a way it has not for nearly 50 years.