Economy

Paul Krugman on the Woefully Underreported, Surprisingly Good News About Medicare

Not that the deficit hawks will listen.

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Remember those scary rising healthcare costs, the ones that historically have risen much faster than G.D.P.?

They are a thing of the past, Paul Krugman informs us in today's column.  "Health spending has slowed sharply," he writes, "and it’s already well below projections made just a few years ago. The falloff has been especially pronounced in Medicare, which is spending $1,000 less per beneficiary than the Congressional Budget Office projected just four years ago."

Wow, this is really great news. Why aren't we hearing more about it? Could it be because the deficit scolds who continue to hold sway in the halls of power don't want us to hear it, and refuse to acknowledge it? Could be, because, as Krugman writes, "a big implication of the Medicare cost miracle is that everything the usual suspects have been saying about fiscal responsibility is wrong."

And the usual suspects don't like that.

Per Krugman:

For years, pundits have accused President Obama of failing to take on entitlement spending. These accusations always involved magical thinking on the politics, assuming that Mr. Obama could somehow get Republicans to negotiate in good faith if only he really wanted to. But they also implicitly dismissed as worthless all the cost-control measures included in the Affordable Care Act. Inside the Beltway, cost control apparently isn’t considered real unless it involves slashing benefits. One pundit went so far as to say, after the Obama administration rejected proposals to raise the eligibility age for Medicare, “America gets the shaft.”

It turns out, however, that raising the Medicare age would hardly save any money. Meanwhile, 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.

Of course, this is not the only aspect of the whole healthcare debate that conservatives are being proven wrong about and most of the media are ignoring, according to Krugman.

Other healthcare stories that you are not hearing about? The supposed savings from running Medicare through for-profit insurance companies. This, Krugman points out, is the way the drug benefits work, "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."

Not so fast conservatives. It turns out "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."

Finally, there's that whole "sticker shock" bugaboo that opponents of Obamacare kept trying to drum up to scare people off reform. Not happening, Krugman reports."Over all, health insurance premiums seem likely to rise only modestly next year, and they are on track to be flat or even falling in several states, including Connecticut and Arkansas."

Obama was right that not only that we should, but that we can provide access to healthcare for uninsured Americans, and it's going to be harder and harder to deny as time goes on. And austerity hawks are wrong that Medicare is unsustainable. "It turns out that incremental steps to improve incentives and reduce costs can achieve a lot," Krugman says, commonsensically, "and covering the uninsured isn’t hard at all."

There you have it: Another conservative economic myth debunked.