Paul Krugman: Medicare Spending Is Down Sharply

Since the mainstream media is mum, and even liberal MSNBC is mostly silent, I thought I’d share a little tidbit about health care spending. Over the last few years, overall health care spending has slowed dramatically, and now we find out Medicare is spending $1,000 less per beneficiary than originally projected by the Congressional Budget Office (CBO). Paul Krugman says this is a really big deal (and it would seem so based on that statistic alone), and he calls it the Medicare Miracle.

First, our supposed fiscal crisis has been postponed, perhaps indefinitely. The federal government is still running deficits, but they’re way down.

— Second, the slowdown in Medicare helps refute one common explanation of the health-cost slowdown: that it’s mainly the product of a depressed economy, and that spending will surge again once the economy recovers. That could explain low private spending, but Medicare is a government program, and shouldn’t be affected by the recession. In other words, the good news on health costs is for real.

— But what accounts for this good news? The third big implication of the Medicare cost miracle is that everything the usual suspects have been saying about fiscal responsibility is wrong.

Krugman notes that this news should be transforming our political debate, but because it’s being underreported, people are free to continue spewing their nonsensical ideological bullshit (my words). Although, since when have things like facts and statistics swayed the deeply intrenched among us (also my words)?

We’ve all seen projections of giant federal deficits over the next few decades, and there’s a whole industry devoted to issuing dire warnings about the budget and demanding cuts in Socialsecuritymedicareandmedicaid. Policy wonks have long known, however, that there’s no such program, and that health care, rather than retirement, was driving those scary projections. Why? Because, historically, health spending has grown much faster than G.D.P., and it was assumed that this trend would continue.

But it’s a trend that doesn’t have to continue, and the Affordable Care Act has helped to level off health care spending. I will argue (and have argued) that Obamacare doesn’t go far enough, and there’s little doubt health care spending will continue to rise, and rise faster than incomes, and that is a problem that will need to be addressed. But we first need everyone to acknowledge that we are better off now than we were just a few short years ago. We need more change in our health care (system), but what we don’t need is regression to the pre-Obamacare status quo.

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