The Associated Press’s Ricardo Alonso-Zaldivar’s headline reads:  “Medicare good till 2026; Social Security no worse.”  A quote from the article:

“An overall slowdown in health care spending is helping Medicare.  Spending cuts in President Barack Obama’s health care law are also having a positive impact on the balance sheet, but they may prove politically unsustainable over the long run.”

Why would there be a slowdown in Medicare spending?  Let’s assume that this slowdown is real for now (although if a government official is saying this, you can reliably bet that it is not real), and look at how this could possibly be the case.  Yes, of course they would lie about this if they thought it made TUCA (The Unaffordable Care Act, or The Unsurpassed Crony Achievement, whichever you prefer) look good. 


Here is how I think the government “economists” are calculating the projected slowdown in Medicare spending.  Medicare has cut payments to private, outpatient oncology clinics by as much as 40%.  CMS (Medicare) is giving its current books credit for this “savings” neglecting the fact that the care for these patients will now cost more at the politically-connected hospital oncology clinics, many of which received a recent raise from Medicare, rather than a cut.  This is just one example of how this would make current balances look better, ignoring greater future liabilities.

Another example would be the “clawbacks” of RAC (Recovery Audit Contractor) audits.  This is basically a private version of the IRS, contractors who work on commission and collect this commission based on the extent to which they deny Medicare payments to physicians and facilities (many of which are physician-owned facilities) for services already performed.  Those who have provided the service can then spend months-years fighting to be paid.  Once again, this type of shakedown has possibly made the current books look a little better.  Never mind that more physicians and facilities are making the decision to quit dealing with Medicare as a result.  Think this would make the books look better too, no?

Remember that these government “reports” come from the same crew that calculates the CPI (Consumer Price Index), always careful to pull from the calculation basket anything that seems to be going up in price in order to make price inflation seem mild to non-existent.  I recently heard shenanigans like this referred to as a “financial parlor tricks.”  I think there is more to this claim of a spending slowdown, though, an aspect that deserves a closer look.

More and more physicians are eliminating Medicare patients from their practices or severely limiting their exposure to Medicare patients.  Doctors are doing this because the pay is poor and the risk is high.  Mistakes on the increasingly complicated billing procedures and codes and claims are fraud until proven otherwise.  Fines and prison looming over poor payment and hassles and RAC audits represent a recipe for a shortage of physicians willing to participate.  The doctor who is “taking new Medicare patients” has become a rarity.  Most surgeons I have talked with are allowing for limited appointments for Medicare patients, one or two a week most commonly, with the goal of eliminating Medicare from their practices altogether.  If the physicians aren’t seeing these patients, they aren’t gaining access to the treatments or surgeries that cost money.  That’s one way to make the books look good, isn’t it?   Go to the head of the class if you think that this is the plan for TUCA. 

Later in the AP article: “If the funds ever become exhausted, the nation’s two biggest benefit programs would collect only enough money to pay partial benefits.”  Wait a minute!  How could the social security or Medicare funds ever become exhausted?  How many times have you heard someone say, “…that’s my money….I paid into that system all of my life!”  “That’s my Medicare.” “Don’t touch my Medicare.” This quote from the article makes one thing clear doesn’t it:  the money that today’s beneficiaries have paid in is long gone.  The money spent on today’s current social security and Medicare beneficiaries comes from money collected from people paying in to these “programs” today. 

This is, of course, the very definition of a Ponzi scheme, something for which private individuals are imprisoned, where old “investors” are paid off with new “investors’” money.  These government schemes make Bernie Madoff look small time, though.

Now imagine that you invested with Bernie and lost everything.  You then successfully sued your children to pay you back what you lost, knowing it would bankrupt them.  That is the essence of social security and Medicare.  These entitlements will not change or end until the current beneficiaries own up to the reality of this arrangement.  Politicians are not going to give up their cozy positions to do the right thing.  They will promise current beneficiaries to protect their entitlement while giving the wink and nod to the rationing price controls at CMS that would deny the very same promised entitlement.  Isn’t it clear that the “solvency” of Medicare (or the soon to be bankrupt Obamacare) would be easily attained by simply paying nothing to folks who are providing the health care?  Universal coverage.  No care.  Budget problem solved!  

There are two ways to help with government solvency.  One way is to end these entitlements, perhaps by punting them to the states first to be dismantled, or to euthanize and ration.  Which path do you think we are on?


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G. Keith Smith, M.D.