There’s obviously considerable discussion about the nation’s long-term fiscal challenges, but in a practical sense, the problem is generally defined in an overly broad way. What we have is a fiscal challenge related to long-term health care costs in specific, not just long-term debt in general. As Jonathan Bernstein explained this week:
As long as health care costs (and, as the popular ages, demand for services) continue to spiral up, it’s going to create huge problems. That’s true if the problems are mainly found in government budgets, or in the private market. […]
The bottom line is that unlike a real budget problem, which could be solved by either cutting spending or raising taxes, the problem here is a broader economic problem, and it calls for a broader economic solution.
Democrats were accurately aware of this when crafting the Affordable Care Act, and it’s precisely why Dems included a variety of cost-control measures in the law.
It matters a great deal that these efforts are already starting to work.
Rick Ungar had a good piece on this last week, and Peter Orszag follows up this week, noting the efficacy of the policy thus far.
And now for some good news: Medicare spending growth has been slowing noticeably. So far this fiscal year, expenditures have actually declined slightly, according to the Congressional Budget Office. […]
We don’t yet have enough data to tell for sure what’s causing the recent deceleration in Medicare spending — or whether it will last. But some evidence suggests it may be a shift toward value in the health-care sector. Various hospital executives have told me they have already begun to prepare for less generous reimbursement from Medicare as the new federal health-care-reform law takes effect and there is a greater focus on value. They are therefore trying to become more efficient now.
The key here is controlling escalating health care costs, which are at the heart of the nation’s long-term fiscal issues. Republicans’ two favorite ideas on this front — raising the age of Medicare eligibility and/or privatizing the system through vouchers — have literally no effect on costs. They really don’t even try, and in the case of eligibility, the GOP idea would actually make the fiscal outlook worse.
The relevant provisions in the Affordable Care Act, meanwhile, address the issue the right claims to care about, but unlike the Republican proposals, actually stands a chance of working, and by some measures, already are working.
I realize this isn’t the sexiest topic in the world, but given the larger fiscal debate, this really is important stuff.
