Trying to restore purity to the base FMAP formula is a pointless battle: healthaffairs.org/doi/abs/10.137
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Chris Pope
@CPopeHC
Senior Fellow, Manhattan Institute.
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In 2021, Medicare spent about $200bn less than CBO in 2007 had projected it would -- enough to pay for all federal transportation spending.
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Congress repeatedly cutting Medicare has reduced program spending well below CBO projections (except 2020 Covid bump).
- Cuts to hospitals and insurers in 2010 ACA.
- Across the board cuts in 2011 BCA sequestration.
- Physician pay freeze in 2015 MACRA city-journal.org/entitlement-re
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The regressivity of the proposed Part A payroll tax was one of the main original Republican objections to Medicare. n.b. Rep John Byrnes, the ranking R on Ways & Means, who also proposed Part B, funded out of general revenue. google.com/books/edition/
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If you're looking to raise taxes on the working class to fuel the growth of retirement benefits for the middle-class, then Trust Fund principles are a good solution. If you're looking to make government better targeted and less burdensome, then it's going the wrong way.
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2) Trying to reform entitlements by asserting Trust Fund principles is just doubling down on Ryanism and the mistakes Romney made running for President: city-journal.org/paul-ryans-ill
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1) The biggest entitlement problem is Medicare Part B, which doesn't have a trust fund.
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This would be a distraction and a step in the wrong direction.
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Sen. @MittRomney's Trust Act is getting attention on Capitol Hill as a mechanism to satisfy demands to do something in conjunction with a debt ceiling increase.
One-pager from his office on how it'd work 
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Why docs didn't like the SGR era -- Medicare physician payment increased much less than inflation: jamanetwork.com/journals/jama-
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Entitlement reform isn't just a choice between "big government" and "small government", it's also a choice between "government that spends only on middle class health and retirement benefits" and "government that has money to spend on other stuff too". city-journal.org/entitlement-re
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"Forty percent of all surgeries in the U.S. involve an implant (defined as metal, clips, screws, tissue, etc.), and those implants account for up to 70 percent of total surgical case costs" beckershospitalreview.com/news-analysis/
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The entitlement-cost problem owes less to existing spending than to statutory commitments to increase future spending beyond the economy’s growth rate. Compared with tax increases, reforming entitlements means just holding the line. city-journal.org/entitlement-re
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Maintaining existing Medicare benefits is not a problem. The retirement of boomers and aging of retirees isn't a problem. To restrain Medicare cost, you only need to slow the *addition* of new services and volumes (esp Part B): cms.gov/files/document
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Whereas Republicans are merely inhibited in cutting Medicare, Democratic candidates in 2020 entirely disavowed broad-based middle-class tax increases.
city-journal.org/entitlement-re
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Major cuts to Medicare formed the basis of bipartisan budget agreements in the 1980s, in 1997, and in 2011. Each party would prefer to capture savings exclusively for its own purposes, but only Democrats have successfully done so (in 2010 and 2022).
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Reforming entitlements would likely impose less pain on voters than hiking taxes, because tax hikes would represent a greater disruption to the status quo.
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It's worth noting that Trump's recent comments about entitlement reform weren't as sweeping as the truncated quote in the media often suggested: thehill.com/homenews/campa
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Replying to
"X is healthcare" is the new (or maybe the original) "X is infrastructure" medicare.org/articles/does-
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Mark Pauly: "Means-tested Medicare payment for future (not present) technology for future (not present) retirees is perhaps a sufficiently attractive solution (relative to other more drastic and more immediate adjustments)"
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Proposals to increase the eligibility age or raise cost-sharing are politically painful distractions, which do little to address the basic issue: Medicare needs to move away from open-ended fee-for-service -- and that's already on course: kff.org/medicare/issue
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You can bring the growth of Medicare below the growth of GDP just by reducing the *increase* of medical volumes and intensity within demographic groups: cms.gov/files/document
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Maintaining existing Medicare benefits is not a problem. The retirement of boomers and aging of retirees isn't a problem. To restrain Medicare cost, you only need to slow the *addition* of new services and volumes (esp Part B): cms.gov/files/document
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This is how it's always worked out over the past 75 years. Congress has repeatedly stepped in to slow the growth curve of entitlement spending to keep it within the historical level of taxation.
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The 20th Century expansion of government was largely because WW2 excused a gigantic tax hike. Beyond that, it's barely grown.
city-journal.org/the-causes-and
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"Cutting entitlements" means just slowing the rate of growth of spending on future beneficiaries. "Tax increases" means *reducing* the amount of disposable income people have. The former imposes a lot less pain.
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Compare how willing Democrats have been to go along with past cuts to Medicare to how hard they fought even against capping SALT:
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The secret to entitlement reform is that Democrats want to cut Medicare too, because it absorbs so much money. They just want to share in the savings: city-journal.org/paul-ryans-ill
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Why long-term deficits will be addressed with entitlement cuts rather than tax increases: archive.org/details/priceo
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Why it's misleading to think of Medicare as a "social insurance" program with dedicated funding: heritage.org/health-care-re
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Out-of-pocket payment is only 3% of hospital spending (vs 15% for physician services). It's likely concentrated on a small subset of patients too.
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As cost sharing continues to rise in commercial markets, a surprising share (~50%) goes unpaid at hospitals. This often results in medical debt for consumers, but affects providers in important ways.
w/ @borisvabson in @Health_Affairs
healthaffairs.org/content/forefr
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The political appeal of social insurance for retirement has declined as the bills for earlier generations have come due and the ratio of working contributors to retired beneficiaries has halved. In health care, the bills come due immediately.
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"Under the agreement that got Mr. McCarthy voted in as speaker... [Congress] must use as its starting point the level of fiscal 2022 spending... That level would effectively erase the spending increase that Congress approved before Christmas" #radicalism
wsj.com/articles/house
The 20th Century expansion of government was largely because WW2 excused a gigantic tax hike. Beyond that, it's barely grown.
city-journal.org/the-causes-and
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You get a much better understanding of history by seeing Marxism as a useful excuse for dictatorship, rather than trying to understand dictatorship as an unfortunate side-effect of Marxism.
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There's a common dynamic on fiscal issues where voters say they like liberal ideas (eg on welfare or envt), but if you ask how much they're willing to spend to fix things, they cite trivial amounts. On cultural issue, the dynamic is often reversed - many cultural cons care little
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This basic dynamic hasn't changed at all in the Trump era. His main achievement was a tax cut, after all.
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Trump voters care far more intensely about taxes (81%) than abortion (36%): docs.cdn.yougov.com/sdsvy1azjc/eco
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It’s a fantasy to imagine the GOP will abandon the fight for small government as federal spending begins to soar. The only thing most R voters like about the party is that it defends them from rising taxes.
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My Sunday column: Kevin McCarthy and the Return of the Pre-Trump GOP:
nytimes.com/2023/01/07/opi
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The flip-side of possessing leverage (MA on track to dominate, with FFS reimbursement set to plummet under current law) is that conservatives can afford to be patient legislatively, and need not open themselves up to attack by unilaterally proposing legislative cuts.
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The simplest way to flatten the Medicare cost curve, is simply to insist on current law's provider payment trajectory -- and let MA plans make up for the reimbursement shortfall where necessary out of their efficiency gains: cms.gov/files/document
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Under the current law trajectory of Basic Medicare reimbursement rates, physicians will soon increasingly drop out of FFS -- and take patients with them: cms.gov/files/document
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Basic Medicare pays without regard to value, has an irrational cost-sharing structure, doesn't cap out-of-pocket costs, lacks key services, and spends more on wealthy who buy supplementals. It's time to see it as a method of setting MA plan benchmarks, not an actual benefit.
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As good MA plans are now available in all counties and we're rapidly headed to a majority-MA program, building policy around such a strategy will become increasingly viable. The statutory status quo and politics of pay-fors provide powerful leverage for such an approach.
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Without these, Medicare Advantage plans would make up shortfalls in provider pay out of their rebate funds. This would pull more beneficiaries into MA plans -- maintaining access to care without adding costs to taxpayers, and bending the program's long-term cost curve.
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