Obama Saves Medicare? Maybe Not.

President Obama on Saturday took credit for placing Medicare on a more certain fiscal path.

Washington Post

I am not a big fan of Megan McArdle, a columnist for the Atlantic, but she has been right on about the administration's spacious Medicare accounting. Obama's recent proclamation of Medicare's improved financial status relies upon these spurious accounting tricks, and future projections he knows to be wrong.

The controversy centers around the Obama administration using the same funds to both lower the deficit and to credit Medicare. I refer you to McArdle's article for a detailed explanation of Medicare accounting. To summarize, Medicare's funds are commingled with those of the federal treasury, and spent immediately. If Medicare pays doctors and hospitals less, the "savings" can be considered as either a credit against future Medicare expenses or to lower the federal deficit. McArdle calls this "double counting". I call it unbelievable.

Even more incongruous that the "saving Medicare" assumptions include a 30% decrease in the payment schedule for doctors. It is a virtual impossibility that Congress would vote for such a decrease, and Obama knows this. Ironically, if the cuts were instituted, many doctors would refuse to see Medicare patients and the program itself would implode. No matter what the outcome, Medicare remains in deep trouble.

The passage of Obamacare did not save Medicare, but instead has made a difficult situation even more intractable. The misleading rhetoric coming out of Washington will make the upcoming collisions with reality even harder.

As the old joke goes, "I have good news and bad news. The operation was a success, but the patient died".

References:

Scott Wilson, "Obama takes credit for healthier Medicare," The Washington Post, Saturday, August 7, 2010. Megan McArdle, "Administration Still Double-Counting Medicare Cuts," August 3 2010, The Atlantic. 5 Things to Consider When Selecting the Right Medical Billing Service   Health Insurance Leads Information   How Communications Affects the Relationship Between a Provider and a Medical Billing Service   Medical Billing And Coding Job Description And Salary - What Do Medical Billers Do?   A Medical Billing and Coding Salary Comparison