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Monday, September 01, 2014

Paul Krugman: The Medicare Miracle

Good news on health care costs:

The Medicare Miracle, By Paul Krugman, Commentary, NY Times: So, what do you think about those Medicare numbers? What, you haven’t heard about them? Well, they haven’t been front-page news. But something remarkable has been happening on the health-spending front, and it should (but probably won’t) transform a lot of our political debate.
The story so far: We’ve all seen projections of giant federal deficits... Policy wonks have long known ... 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 a funny thing has happened: Health spending has slowed sharply ... This is a really big deal...
But what accounts for this good news? ... Medicare is spending much less than expected, and those Obamacare cost-saving measures are at least part of the story. The conventional wisdom on what is and isn’t serious is completely wrong.
While we’re on the subject of health costs, there are two other stories you should know about.
One involves the supposed savings from running Medicare through for-profit insurance companies. That’s the way the drug benefit works, and conservatives love to point out that this benefit has ended up costing much less than projected, which they claim proves that privatization is the way to go. But the budget office has a new report on this issue, and it finds that privatization had nothing to do with it. Instead, Medicare Part D is costing less than expected partly because enrollment has been low and partly because an absence of new blockbuster drugs has led to an overall slowdown in pharmaceutical spending.
The other involves the “sticker shock” that opponents of health reform have been predicting for years. Bulletin: It’s still not happening. ...
What’s the moral here? For years, pundits and politicians have insisted that guaranteed health care is an impossible dream, even though every other advanced country has it. Covering the uninsured was supposed to be unaffordable; Medicare as we know it was supposed to be unsustainable. But it turns out that incremental steps to improve incentives and reduce costs can achieve a lot, and covering the uninsured isn’t hard at all.
When it comes to ensuring that Americans have access to health care, the message of the data is simple: Yes, we can.

    Posted by on Monday, September 1, 2014 at 12:24 AM in Economics, Health Care | Permalink  Comments (121)

          


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