TW: This piece puts meat on the bone of how hard it is to control spending. It is a relatively trivial example and slightly convoluted but useful. Due to the detailed rules with Medicare premiums since inflation is so low overall, Congress will further reduce the ratio of out-of-pocket premiums for doctor visits even though the costs of those visits do have some inflation.
Without getting too far into the trees, the monthly premiums for those elderly couples earning over $170K were set to rise by $16 a month. Not anymore, a "fix" passed 406-18 (there is bi-partisanship for you) to annul this potential travesty. My Dems proposed the "fix" and the allegedly newly fiscally conservative Republicans jump right in with them. Another $2.8 billion down the drain. And as Bartlett points out, the $2.8 billion will likely expand into tens of billions as Congress appears unable to put any increases onto the elderly.
From Bruce Bartlett at Forbes:
"The main reason why it's so difficult to control federal spending is because so much of it is on automatic pilot. Spending for entitlement programs like Social Security and Medicare rises automatically and cannot be cut except by changing the law governing them. They are also so large and complex that small, almost invisible changes in formulas for calculating benefits can end up costing billions upon billions of dollars.
One of these changes involves Medicare Part B, which pays for doctors visits. Part A pays for hospitalization and Part D pays for prescription drugs...Part B premiums [are set] at 25% of [actual] costs with taxpayers subsidizing the elderly by paying the rest.
Increases in Part B premiums take effect at the same time COLAs increase Social Security benefits, so beneficiaries generally don't notice them too much since COLAs are usually larger in dollar terms than the increase in Part B premiums. However, this is one of those years when that is not the case...Since prices have not risen enough this year to compensate for the unintended bonus, Social Security recipients won't receive a COLA in January.
This created a problem for Medicare because Part B premiums can't increase more than Social Security COLAs increase--at least for most beneficiaries. But some 27% of Part B participants are not held harmless. These include those with low incomes who are eligible for both Medicare and Medicaid, those with incomes above $85,000 ($170,000 for couples), new Medicare enrollees and those whose premiums are not automatically deducted from the Social Security checks.
These beneficiaries would see their Part B premiums rise from $96.40 per month to between $110 and $120 per month...
In reality, the vast bulk of those affected by this premium increase are also held harmless because their premiums are covered by Medicaid. So the individuals would not be any worse off, but the increased cost would be borne by the states. New enrollees are not really suffering because they haven't been paying Medicare premiums at all until now, and the number of people who don't have premiums deducted automatically is very small.
The main people affected by this situation are those with high incomes for whom paying $6 to $16 a month extra can hardly be considered burdensome. Nevertheless, the alleged unfairness of their predicament moved the House of Representatives to extraordinary action.
On Sept. 23, Rep. Dina Titus, D-Nev., introduced H.R. 3631, which would freeze all Part B premiums for one year--including those for couples with incomes over $170,000. It would pay for the $2.8 billion cost by raiding the Federal Supplementary Medical Insurance Trust Fund and the Medicare Improvement Fund. This legislation came up the following day and passed the House by a vote of 406 to 18.
...Interestingly, the only representative willing to speak against this unjustified give-away was House Majority Leader Steny Hoyer, D-Md. He mocked the fact that multimillionaire Ross Perot's Part B premium would be frozen by the legislation, as well as those of members of Congress covered by Medicare such as himself, and asked how can we afford to take care of everyone regardless of their ability to pay? At some point there won't be sufficient resources for the truly needy, Hoyer said.
...More importantly, there is the fact that the law requires Medicare Part B beneficiaries to bear 25% of the program's costs. Since those costs are continuing to rise rapidly, there is going to have to be some kind of catch-up in the future to ensure that beneficiaries continue to pay 25%. When they are in effect forced to pay two or three years of premium increases all at once, the elderly are going to raise a major stink. History suggests that they will get whatever they want regardless of which party is in power.
The real point of this story is not to complain about a $2.8 billion drain on the Treasury, but rather to show how technical many important budgetary problems are and how difficult it is to even understand them. Yet many conservatives seem to think that all they have to do to get the budget under control is show up at a town hall meeting and scream about the deficit at the top of their lungs. These people were nowhere to be seen, however, when a little bit of opposition might have derailed this boondoggle.
...It's easy to rail against deficits in the abstract. It's a lot harder with the following circumstances: when voting on legislation that is popular with a key constituent group like the elderly, when the amount of money involved is small, when there is a genuine element of unfairness involved, when there is no opposition whatsoever, when the legislation is extremely technical and brought up for a vote almost immediately after it's introduced with no hearings, no committee mark-up, no committee report and under procedures reserved for noncontroversial bills. Those who think tea parties are the answer to our budget problems should keep this in mind the next time they feel moved to say that controlling deficits is a simple matter of will."
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