Krugman: Medicare and Health Reform

[ProSense]

Medicare and Health Reform

Many attacks on health reform involve assertions that the law’s proposed Medicare savings can’t possibly materialize, that the Democrats just made stuff up. So it’s worth looking at where those savings are supposed to come from. The Center on Budget and Policy Priorities has a nice summary of the law’s financing; here’s the Medicare table:



The 10-year total is $441 billion. Which parts of this are at all flaky?

Not the cuts in Medicare Advantage — that’s a straightforward reversal of the giveaway embedded in the 2003 Bush drug benefit law.

Not the reduction in drug costs, which amounts simply to making better use of bargaining power that we already know the government has — in fact, this item could have been much larger.

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So, will the reform produce exactly the assumed savings? No. But there’s no reason to consider the whole thing pie in the sky. In fact, there’s a reasonable chance that by finally placing some emphasis on only paying for treatments that work, the reform will actually save considerably more than the law assumes.

[elleng]

1. MUCH larger (drug payments), imo.

Fed 'ees Health Benefit Plan, which includes negotiation, provides excellent drug costs among its providers. (A bunch of insurers participate, and the Fed govt negotiates w them, resulting, for one, in 95cents for me, for one month/one prescription.)

[ProSense]

2. Members of Congress are required to use the exchange

it's likely the OPM will negotiate based on similar terms.