On Medicare, Obama and Romney Are Both Wrong

Medicare has provoked sharp disagreement in this presidential campaign. Unfortunately, on this critical issue, neither candidate is leveling with the American people.
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Medicare has provoked sharp disagreement in this presidential campaign. Unfortunately, on this critical issue, both candidates are wrong.

President Obama acknowledges that his health care reform plan calls for future Medicare spending over $700 billion less than it otherwise would be. President Obama reassures current and prospective Medicare recipients that Medicare providers such as physicians and hospitals will bear the cost of this reduction in projected spending. Medicare participants, the president reassures, won't feel a thing.

Governor Romney, as part of the repeal of President Obama's signature health care legislation, wants to cancel this planned reduction in projected Medicare outlays. Medicare, the Republican nominee tells us, need only be reformed for those currently in their 50s and younger.

Neither candidate is leveling with the American people.

The president is wrong. Money cannot be diverted from Medicare providers without that diversion impacting Medicare patients. Some Medicare providers will respond to lower than projected funding levels by adopting greater efficiencies. These efficiencies, even when medically appropriate, will in many cases upset the settled expectations of Medicare patients. For example, we can expect health care providers to reduce tests and to decrease their use of expensive technologies, such as MRIs.

Some Medicare providers will respond to President Obama's belt tightening by ceasing to service Medicare patients. For these providers, it won't pay to accept Medicare's rate of reimbursement. This phenomenon is already widespread with respect to Medicaid. Many physicians and hospitals today decline to treat Medicaid patients because of Medicaid's relatively low payment rates.

If Medicare's payments to providers are curbed significantly, some health care providers will respond similarly and will stop treating Medicare patients.

A leaner and meaner medical system will upset the expectations of many existing Medicare patients. Since it is fiscally necessary to make these painful adjustments, President Obama is right to call for them. However, he is wrong to pretend that Medicare patients will be spared any pain.

Governor Romney is equally mistaken. He would give baby boomers like me a free pass on Medicare by restoring these projected spending reductions. The pain of curbing Medicare outlays, the Republican nominee proclaims, should fall only on the younger generation.

The unpleasant reality, avoided by both candidates, is that Medicare expenses must be controlled now (not simply in the future). Moreover, controlling those expenses will cause discomfort to current as well as prospective Medicare beneficiaries.

For the short-run, both parties' campaign apparatchiks prefer to avoid the economic truths that the present path of Medicare spending is unsustainable and that serious curbs on that path will discomfort current Medicare participants. For the long-run, avoiding those truths during the campaign will impede necessary changes, since whomever is elected will lack a genuine electoral mandate to restore Medicare's solvency.

When we go to the polls, it would be good to vote for a candidate who has openly and honestly confronted the realities of Medicare. Unfortunately, neither major party has nominated such a candidate.

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