Posts tagged with: medicare

A commentary by Acton Research Director Samuel Gregg titled “Deficit Denial, American Style” which was published in Acton News & Commentary on March 9th appeared today in the Detroit News as “It’s time to curb welfare growth” and was also picked up by RealClearPolitics. Gregg provides an enlightening examination on the growth of the welfare system, and with our current budget problems, the need to also reform it:

If, however, the results of a much-discussed Wall St Journal-NBC News poll released on March 2 indicate what Americans really think about fiscal issues, then much of the country is clearly in denial – i.e., refusing to acknowledge truth – about what America needs to do if it doesn’t want to go the way of many Western European nations.

While the poll reveals considerable concern about government debt, it also underscores how unwilling many Americans are to reduce those welfare programs that, in the long-term, are central to the deficit-problem.

Here are the raw facts. America’s federal social security program has become the largest government pension scheme in the world in terms of sheer dollars. It is also by far the federal budget’s single greatest expenditure item.

According to the Office of Management and Budget, “human services” ― Social Security; Medicare; Health-expenditures; Education, Training, Employment, and Social Services; Veterans benefits; and the euphemistically-named “Income Security” (i.e., unemployment-benefits) ― were consuming 4 percent of America’s GDP in 1949. By 1976, this figure had increased to 11.7 percent. In 2009, it was consuming 15.3 percent of GDP.

During the same period, human services began consuming a steadily-increasing size of federal government expenditures. In 1967, human services spending was 32.6 percent of the federal budget. By 2009, this figure had increased to 61.3 percent. It is predicted to rise to 67 percent by 2016. In 2010, 75 percent of human services spending was on Social Security, Medicare, and Income Security ― in short, the core welfare state.

These disturbing numbers make it clear any serious federal deficit reduction must involve spending-cuts to federal welfare programs. That doesn’t mean other areas of government-spending should be immune from cuts. But the deficit simply can’t be properly addressed without a serious willingness to reduce welfare-expenditures.

The original Acton commentary by Samuel Gregg can be read in full here.

A new commentary from Acton Research Director Samuel Gregg. Sign up here to get the latest opinion pieces delivered to your email inbox on Wednesday with the free weekly Acton News & Commentary.

Deficit Denial, American-Style

By Samuel Gregg

Until recently it was thought the primary message of the 2010 Congressional election was that Americans were fed up with successive governments’ willingness to run up deficit-after-deficit and their associated refusal to seriously restrain public spending.

If, however, the results of a much-discussed Wall St Journal-NBC News poll released on March 2 indicate what Americans really think about fiscal issues, then much of the country is clearly in denial – i.e., refusing to acknowledge truth – about what America needs to do if it doesn’t want to go the way of many Western European nations.

While the poll reveals considerable concern about government debt, it also underscores how unwilling many Americans are to reduce those welfare programs that, in the long-term, are central to the deficit-problem.

Here are the raw facts. America’s federal social security program has become the largest government pension scheme in the world in terms of sheer dollars. It is also by far the federal budget’s single greatest expenditure item.

According to the Office of Management and Budget, “human services” ― Social Security; Medicare; Health-expenditures; Education, Training, Employment, and Social Services; Veterans benefits; and the euphemistically-named “Income Security” (i.e., unemployment-benefits) ― were consuming 4 percent of America’s GDP in 1949. By 1976, this figure had increased to 11.7 percent. In 2009, it was consuming 15.3 percent of GDP.

During the same period, human services began consuming a steadily-increasing size of federal government expenditures. In 1967, human services spending was 32.6 percent of the federal budget. By 2009, this figure had increased to 61.3 percent. It is predicted to rise to 67 percent by 2016. In 2010, 75 percent of human services spending was on Social Security, Medicare, and Income Security ― in short, the core welfare state.

These disturbing numbers make it clear any serious federal deficit reduction must involve spending-cuts to federal welfare programs. That doesn’t mean other areas of government-spending should be immune from cuts. But the deficit simply can’t be properly addressed without a serious willingness to reduce welfare-expenditures.

And yet despite all the passionate rhetoric from Americans about the need to diminish government-spending, the Wall St Journal-NBC News poll suggests that fewer than 25 percent of Americans favor cutbacks to Social Security or Medicare as deficit-reduction measures. As the Wall St Journal’s own commentators noted: “Even tea party supporters, by a nearly 2-to-1 margin, declared significant cuts to Social Security ‘unacceptable.’

Unacceptable? Think about that word. Do large numbers of Americans really believe there is something morally evil about significant reductions to welfare-spending under any circumstances? Since when – apart from Greece and other models of fiscal rectitude – have welfare payments assumed the status of an absolute right subject to no qualification? Have we really gone so far down the path of economic-Europeanization?

Granted, the same poll suggests much larger numbers of Americans are willing to raise the retirement age to 69 and means-test social security. But is that the best Americans are willing to do?

Spain’s unreconstructed-1960s-lefty Socialist government has just lifted Spain’s retirement-age to 67. Unsurprisingly, that won’t fully kick-in until 2027, long after Spain’s political class and their tame voting constituencies have met their Maker and no longer need to live off their children’s futures. But can Americans who proclaim their attachment to free enterprise and personal responsibility really do no better than left-wing Western Europeans?

Back in 2007, the journalist Robert J. Samuelson summarized the situation perfectly. “Most Americans,” he wrote, “don’t want to admit that they are current or prospective welfare recipients. They prefer to think that they automatically deserve whatever they’ve been promised simply because the promises were made. Americans do not want to pose the basic questions, and their political leaders mirror that reluctance. This makes the welfare state immovable and the budget situation intractable.”

Presidential campaigns are invariably accompanied by a great deal of posturing. It would be helpful, however, if some serious candidates for the nation’s highest office in 2012 – Republican or Democrat – would use their moment in the spotlight to educate Americans about what’s at stake.

One former American vice-president once reportedly insisted, “Deficits don’t matter.” Unfortunately, there is mounting proof he was wrong. After examining data on 44 countries over approximately 200 years, two economists recently found evidence suggesting that developed nations with gross public debt levels exceeding 90 percent of GDP (i.e., America) find that their medium-growth rates fall by one percent, while average growth declines by an even greater proportion.

That’s worrying because while deficit-cutting matters, wealth-creation matters even more if we are to dig ourselves out of our fiscal hole. America now seriously risks seeing its burgeoning welfare costs suffocating the productive sector of the economy that makes social welfare possible in the first place.

Incidentally, it won’t be the rich who suffer. It will be the poor. In their laudable concern for the weakest among us, Americans ought to remember that and start matching political rhetoric with consistent fiscal action.

Dr. Samuel Gregg is Research Director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, and Wilhelm Röpke’s Political Economy.

In yesterday’s edition of the Grand Rapids Press, editorial page editor Ed Golder reflects on the implications of the historically-high levels of government spending, the deficit, and debt.

Most impressively, Golder notes where the government is actually spending money, and it is largely not in the areas of discretionary spending that so many politicians like to talk about. Golder writes,

Neither party is forthrightly honest about what needs to be done. Making the necessary cuts touches on very large and politically sacrosanct programs. About one fifth of federal spending, for instance, is defense. Can we seriously tackle the budget without looking at some prized weapons programs?

And the biggest category of spending, the one growing at the fastest rate, is entitlements – Medicare, Medicaid, Social Security and health insurance for children.

We may have to accept the idea that rich people will pay more than poorer people for medical coverage. We will almost certainly, given life expectancies, have to work longer before receiving Social Security benefits.

Reform of defense spending is important. But the real key is entitlement reform. I’ve often thought that one lasting legacy of the Bush era (beyond the wars and the Great Recession) is found in his insistence on bringing to the national discussion the issue of entitlement reform, particularly Social Security. He wasn’t successful, but it did show some principled political courage to make Social Security reform a major policy goal of his administration.

Golder also relates this entertaining little anecdote:

Speaking to the Economic Club of Grand Rapids Monday, financial forecaster Jason Trennert, was asked by an audience member to handicap Washington’s ability to make meaningful headway in tackling the debt. He wryly quoted theologian Augustine of Hippo, who famously quipped, “Lord make me chaste, but not yet.”

In other words: Sure, we’ll reform. Tomorrow.

Tomorrow’s here. Heck, tomorrow may be yesterday at this point.

That’s one other legacy of the Bush era that we are living with, the legacy of the mantra, “Lord, make me thrifty, but not yet.” That goes for the politician as well as for the citizen.

Golder rightly concludes by pointing to the need for leadership on these pressing fiscal issues. We’ve gotten to this place largely because of a lack of political leadership. “Our leaders have to talk frankly about what needs to be done – programs that will be cut, individual sacrifices that will have to be made,” writes Golder.

Instead of statesmen we’ve been electing those who could bring home the most pork for their districts and constituencies, damn the consequences. That needs to change, and it begins in the renewal of leadership in other spheres of social life, including the family, business, charity, education, and so on.

From the Jan. 5 Acton News & Commentary. This is an edited excerpt of “Health-Care Counter-Reform,” a longer piece Dr. Condit wrote for the November 2010 issue of the Linacre Quarterly, published by the Catholic Medical Association. For more on this important issue, see the Acton special report on Christians and Health Care. Dr. Condit is also the author of the 2009 Acton monograph, A Prescription for Health Care Reform, available in the Book Shoppe.

Obamacare and the Threat to Human Dignity

By Dr. Donald P. Condit

Since President Obama signed the Patient Protection Act into law in March 2010, the acrimonious debate on this far-reaching legislation has persisted. For many, the concerns over the Obama administration’s health care reform effort are based on both moral and fiscal grounds. Now, with House Republicans scheduling a vote to repeal “Obamacare” in the days ahead, the debate is once again ratcheting up.

Perceived threats to the sanctity of life have been at the heart of moral objections to the new law. Despite a March 2010 executive order elaborating the Patient Protection Act’s “Consistency with Longstanding Restrictions on the Use of Federal Funds for Abortion,” many pro-life advocates fear a judicial order could reverse long-standing Hyde amendment restrictions on the use of federal tax dollars for abortion. Impending Medicare insolvency and the Patient Protection Act’s establishment of an “independent payment advisory board” to address treatment effectiveness and cost suggest bureaucratic restrictions on the horizon for medical care of the elderly and disabled.

The objections made on fiscal grounds are serious. Prior to the 2008 presidential election, Barack Obama voiced concern for 47 million Americans without health insurance. More recently, supporters of this legislation focused on 32 million Americans, with 15 million immigrants and others left out of the equation, yet still requiring care in United States emergency rooms. The Patient Protection Act increases eligibility for Medicaid recipients, yet state budgets are severely strained with their current underfunded medical obligations. Moreover, doctors struggle to provide health-care access to Medicaid patients when reimbursed below the overhead costs of delivering care.

Who Should Pay?

The perception among consumers of third-party responsibility for health, including payment for health-care resource consumption, is the major factor for unsustainable escalation of medical spending in the United States. Yet the Patient Protection Act augments third-party authority and threatens doctor-patient relationship autonomy, by increasing responsibility of government and employers for health care. Patients and physicians will face increasing involvement of third parties in decision making in exam rooms and at the bedside. (more…)

Another election has come and gone, and once again the balance of power has significantly shifted in Washington, D.C. and statehouses across America.  Tuesday’s results are, I suppose, a win for fans of limited government, in that a Republican House of Representatives will make it more difficult for President Obama and his Democrat colleagues in the Congress to enact more of what has been a very statist agenda.  But even with the prospect of divided government on the horizon, we who believe in individual liberty and the principles of classical liberalism still have much to be concerned with.  Perhaps the primary concern is whether or not those Republicans who were swept into office—not due to any real love of the electorate for the Republican Party, but rather due to anxiety over the direction the Democrats have taken the country—will be able to hold to the principles of limited government and individual liberty that so many of them claimed to espouse during the campaign, or whether those principles will be abandoned in a mad pursuit of power.  Forefront in the mind of every lover of liberty should be Lord Acton’s famous maxim: “Power tends to corrupt, and absolute power corrupts absolutely.”

My sincere hope is that with Americans deeply dissatisfied with both major political parties and finding that the government is either unable or unwilling to solve the major fiscal and social problems that we face, people will begin to re-think their basic assumptions about the role of government in American life.  For decades, the default assumption has been that the government is a force for good and can be a driver of positive social change.   Witness Social Security, Medicare, the Great Society, the War on Poverty, etc.  All of these programs were designed by experts to alleviate some pressing social need, and were assumed to be the right thing to do.  After all, who wouldn’t want to help the poor and elderly to live a fuller, better life?  And yet, as the years went by, all of these programs—though well-intentioned by their creators—have failed to achieve their lofty goals.  The Social Security “trust fund” is devoid of funds and packed with IOUs left by politicians who, over the years, have spent the money promised to seniors on other programs.  Medicare, Medicaid, and other government health care programs have warped the economics of health care, paying doctors less and less and therefore driving up the cost of private insurance in order to make up the difference.  Obamacare is little more than an attempt by the government to solve a cost crisis—created in large part by government intervention—with even more extensive government intervention into the market.  We already know how that story ends.  And as for the Great Society and the War on Poverty, trillions of dollars over the years simply failed to alleviate poverty in America, and in many cases only created deeper, more entrenched social problems.

It is clear by now to anyone who cares to look that massive government intervention into society tends to do more harm than good, no matter how well intentioned the interventionists are.  Government has its place—no arguments for anarchy are to be found here—but the government must be limited to its proper place.  The genius of the American founding came in the limitation of the national government to certain enumerated functions, leaving the people at liberty to take care of the rest of life as they saw fit.  The respect for individual liberty and the acknowledgement that the rights of citizens were not granted by the state but were granted to individuals by God himself provided a firm foundation for the vibrant growth and strength of the United States in the coming centuries.  As a people, we need to realize that the further we move away from those founding principles and the more we cede our liberty to governmental agents in return for a promise of security, the less likely it is that we will remain strong, vibrant, and free.

At the Acton Institute 20th Anniversary Celebration, Acton President Rev. Robert A. Sirico reminded us of the roots of human dignity and the importance of individual liberty during his keynote address:

My new column on health care was published in the Detroit News today. Full text follows:

As the health care debate moves to the U.S. Senate, much of the focus has been on how the Catholic bishops’ support of the amendment by U.S. Rep. Bart Stupak, the Menominee Democrat, to prohibit the use of tax dollars to fund abortion was a major victory for the pro-life side. The bishops urged the House of Representatives, through local parishes and in a Nov. 6 letter, to ensure that “needed health care reform legislation truly protects the life, dignity, health and consciences of all.”

All people of good will, all those who value human life and dignity, should cheer this development.

But there’s more to this health care juggernaut that should give us reason to oppose it in its current form. We should first be concerned with the vast expansion of government reach into the private lives of millions of Americans.

This “reform” will create a system that will put bureaucrats in charge of personal health care decisions — not doctors. It will give the federal government an avenue to nationalize more than 15 percent of the U.S. economy, putting bureaucrats and elected officials in the role of manager and regulator — much as we’ve seen in banking and automobiles.

Amazingly, with the push for a $1 trillion-plus health care package and the attendant debt, we may soon see Canada with lower government spending (as a percent of gross domestic product) on heath care than the United States. All this, too, is a threat to human dignity.

What will this heavy burden of government spending and regulation have on U.S. health care innovation and competitiveness, which has to date pioneered so many advances? How many medical research and development firms would leave our shores under threat of higher taxes and regulation?

All the assurances from President Barack Obama that health care reform will not add “even one dime to our deficit over the next decade” seem more fantastic with every passing day.

A new report shows that projected Medicaid cuts, on which rests much of the financial funding for health care reform, would prove to be so onerous to hospitals and nursing homes that they would simply stop taking such patients. The report, by the chief actuary for Medicare and Medicaid, also questions how doctors and hospitals would cope with an additional 30 million people to the ranks of the insured, many of them into public health programs.

As it’s been said, if you think health care is expensive, wait until it’s free.

I also worry about the crowding out effect that this vast expansion of the government into health care will have on voluntary charitable action. Somewhere along the line, we have lost sight of the fact that charity and health care was not an invention of Washington bureaucrats.

How did the more than 600 Catholic hospitals and clinics, and many more hospitals bearing the names Jewish, Presbyterian, Methodist, Adventist and Baptist, get built in this country? It wasn’t through the sufferance of government.

Faith is the source of these works, not policy initiatives. Faith, because it involves the entire scope of the human person, body and soul, has not only a larger claim on our allegiance but a deeper commitment to our well-being. Our faith communities know us as persons, not as welfare case numbers or voting blocs.

The effect of the proposed massive expansion of government and vast increase in federal debt is unknown, but if the experience of other countries is any guide, it will lay a crushing burden on the lives of future generations.

The Senate health care reform package should be scrapped. The ill-conceived plan will break the budget, provide fewer opportunities for market-driven health care solutions and limit those who want to practice real charity.

Hunter Baker examines the push for the “public option” — the creation of a government backed insurance system — as part of health care reform in his commentary.  Baker takes an interesting approach at examining the push for a public option by dropping his readers into the life of a doctor, articulating the stress and sacrifice of the job:

Imagine that you are a physician. You have made it through four years of college on a steady diet of biology, chemistry, and calculus, four years of medical school so demanding that you have no life outside of school, and at least three years of residency in which you have regularly worked 100 hours a week for a very low salary. You have been the first to get up and the last to go home. And somewhere in there your third decade of life, commonly known as your “twenties” (normally a fun time), has disappeared. Along the way, you have probably racked up an astronomical personal debt because there is no time to work a second job to help pay it off. The first professional hurdle you set out to clear will be six figures accumulating interest. Forget family. If you have a spouse at this point, he or she is probably full of resentment at never seeing you.

After all this, have you made your way to an easy job? No. You are likely spending four days a week seeing patients, another day in surgery, taking a 24 hour call every four days, and working one weekend out of every four. The only time you are ever off is when another doctor can be found to cover your responsibilities while you are out. The job itself is rewarding, but incredibly difficult.

Furthermore, Baker addresses the argument that a public option is basically the same thing as Medicare, and demonstrates just because we already have Medicare does not mean that we should have a public option.  Taking it a step further, Baker points out the flaws of Medicare and parallels this flaws to those that may occur under a public option:

Why the big protest? Doesn’t Medicare do the same thing? Doesn’t Medicare dictate prices? It does, but it works for one reason. Medicare is essentially parasitic on a functioning free market for medical services. Doctors are willing to accept low compensation at the margins because they do want to help people and programs like Medicare help them pay the cost of treatment for those who can’t pay. But if the whole market became like Medicare, the economic freedom of doctors would disappear. And that is the problem with an open-door public option that could expand to envelop the practice of medicine.

Blog author: jballor
Wednesday, January 24, 2007
By

Last night the President spoke of “the challenge of entitlements” and said that “Social Security and Medicare and Medicaid are commitments of conscience — and so it is our duty to keep them permanently sound.”

“With enough good sense and good will, you and I can fix Medicare and Medicaid — and save Social Security,” he averred. The ability of the federal government to negotiate drug prices has been an aspect of the recent debate over Medicare that was brought to the fore in the recent “100 hours” legislative agenda.

A number of conservative commentators have come out against this idea, including Acton’s own Rev. Jerry Zandstra and Benjamin Zycher of the Manhattan Institute (HT: The Reform Club). These are just two voices in a chorus of criticism rising against federal negotiation (I use them just because they are the ones with which I’m most familiar. I don’t mean to pick on anyone in particular).

Both of their arguments seem to me to boil down to this: the government is an effective negotiator and the result of negotiation will be that drug companies will have less money coming in and therefore spending on research and development will suffer.

Zandstra says of successful negotiation, “if, in doing so, you dry up research and development dollars so you aren’t developing drugs to treat cancer and Alzheimer’s and other diseases — if you take the profit motivation away — have you done good? No, you really haven’t.”

Zycher writes, “Federal price negotiations will cause sharp price reductions, but this will yield less research and development investment in new and improved medicines over time.”

These claims fail at a number of points in my opinion. Zycher and Zandstra are probably right on the mere claim that federal negotiation of drug prices will produce a drop in pharma income. But that isn’t the datum that is most relevant to the policy discussion.

Once government has decided to tax us and spend our money on a particular program, I think it is government’s responsibility to spend that money as well as it can, to be good stewards of efficient and productive use of those funds. This is true regardless of whether or not the program itself is one that government should be undertaking. The question of whether the government should be doing or pursuing a particular program or agenda is a different one than whether the government should pursue these programs efficiently and well.

So, given that Medicare is an entitlement to which our government has committed itself, it seems to me that the government is responsble for administering it as cost-effectively as possible. The government needs to make our tax dollars stretch as far as they can. This should include negotiating lower prices paid for prescription drugs, regardless of the effect it might have on drug company profits or research budgets.

It is a separate question whether drug companies need federal support to achieve the current or higher levels of funding for research and development. But let’s assume for the sake of argument that pharma companies do need federal support to find new drugs for “Alzheimer’s and other diseases.” If that’s the case, then the argument for subsidizing pharmaceutical research should be parsed out from the question of drug price negotiation.

Refusing to allow the feds to negotiate prescription drug prices effectively creates a subsidy for drug companies…something I would think that Zandstra and Zycher would be against, at least in principle. But maybe not.

Drug companies are in fact struggling, it seems. Pfizer, for instance, is shutting down operations at three Michigan sites and laying of 2400 workers, as part of a broader layoff of 10% of its workforce. And perhaps the estimated “loss of about five million life-years each year” is sufficient reason to support government subsidy of drug research.

But if conservatives are in favor of government subsidies for drug companies, they need to make that argument stand on its own and separate it from the question of price negotiation. Government subsidy of drug R&D should be a separate question, complete with its own line-item and its own policy analysis.