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Brandon Arnold Dan Barrett Demian Brady Jeff Dircksen Ross Kaminsky David Keating Douglas Kellogg Richard Lipman Kristina Rasmussen Lee Schalk Pete Sepp Nan Swift |
Medicare and MedicaidObama's FY 2014 Budget on Medicare In part two of three, I take a look at the predictions of the President's FY 2014 Budget in how it might affect Medicare. Note: Figures are in ten-year windows (not the usual five-year increments under the BillTally project). Current status: Via the Centers on Medicare and Medicaid Services (CMS), health care costs for disabled and senior Americans will continue to rise, so much so that the program could be insolvent by 2027. From 3.7 percent of GDP in 2011, the Medicare Hospital Insurance and Supplementary Medical Insurance Trust Funds will continue to grow in obligations to approximately 6.7 percent of GDP by 2086 (73 years from now). We're talking trillions of dollars in projected obligations that traditional funding methods, a mix of payroll taxes and regular government spending. Possibilities for FY 2014:
Bottom line: Even if all of the savings realized, the structural problems of Medicare outweigh many proposals, even ambitious ones. Though streamlining payment processes and taking more money away from drug companies could help to offset some current deficits, taxpayers need trillion-dollar solutions to the economy’s biggest single expense program. On the other hand, by requiring drug companies to pay more to the government, prescription prices may increase. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Obama's FY 2014 Budget on Medicaid In this final post, I delve into what President Obama's FY 2014 Budget might do to Medicaid funding. Note: Figures are in ten-year windows (not the usual five-year increments under the BillTally project).
Program update: Using Congressional Budget Office data, the Kaiser Commission on Medicaid and the Uninsured projects an average eight percent spending increase for each of the next ten years, which is mostly due to the program’s expansion under the Affordable Care Act. Like Medicare, Medicaid costs are also expected to up-tick with many recipients getting older and requiring more costly care more often. So, in the short run, Medicaid and CHIP (the children's version of Medicaid) spending will increase by $638 billion before FY 2023.
What’s projected:
What this means: Given the Affordable Care Act’s broad expansion of Medicaid, it is difficult to say whether these reforms would mean real savings for taxpayers or if they could even stem the tide of high costs that are likely to occur. The Fiscal Times credited these three measures with a $25 billion savings but they are uncertain, conditional, and perhaps overly optimistic. Just as with Medicare, the full amount of savings do not make up for the projected growth in outlays and more fundamental reform (or revenue increases) are required. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Sports Memorabilia and Health Care Reform An article published in the Bradenton Herald on Thursday highlights one of the interesting, if not unintended, consequences of the new Medicare taxes that the Patient Protection and Affordable Care Act is set to levy beginning in 2013. Sports memorabilia enthusiasts may have noticed the recent surge of high-dollar collectibles flooding auction houses: Bobby Knight's NCAA Championship rings; Don Larsen's New York Yankees pinstripes; even Evander Holyfield's heavyweight boxing championship belts. Perhaps not so coincidentally, these valuable items are hitting the auction market right before January 1st, when a new 3.8 percent Medicare tax on investment income will take effect for high-income individuals. As mentioned in the article: "And starting Jan. 1, there will be a new Medicare tax on income from investments for higher-earning people. The IRS hasn't issued rules yet, so money from the sale of collectibles may be subject to the new levy. "The 3.8 percent Medicare tax would probably be the thing that immediately popped into my mind in terms of what folks may be thinking about," said David Boyle, Americas director of personal financial services for the accounting firm Ernst & Young." Currently, income generated from collectibles held for more than a year is eligible to be taxed at a rate of 28 percent. So, if I'm a wealthy individual who bought Babe Ruth's 1920 uniform for $4.4 million and sold it a few years later for $5 million, I could owe 28 percent of the difference in capital gains taxes. With the PPACA's passage, that amount could increase by 3.8 percent beginning in 2013. The new Medicare tax, combined with the possibility of Bush-era tax cuts expiring and the estate tax, apparently has some athletes and sports figures more closely examining the benefits of cashing in on their most sought-after mementos sooner rather than later. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
NTUF Release GOP Presidential Candidates Studies In case you missed it...
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2012 Republican Presidential Candidate Spending Analysis |
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Type of Proposal |
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Spending Increase |
6 |
2 |
3 |
6 |
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Spending Cut |
6 |
6 |
11 |
16 |
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Unknown Cost |
27 |
13 |
28 |
27 |
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TOTAL |
39 |
21 |
42 |
49 |
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According to NTUF, GOP frontrunner Mitt Romney’s platform would reduce federal outlays by a net of $353.0 billion annually, Newt Gingrich’s extensive policy plans would shed $146.2 billion from the budget, and Rick Santorum had $670.6 billion in cuts on his radar prior to ending his campaign. Ron Paul seeks $1.2 trillion in yearly net reductions.
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2012 Republican Presidential Candidate Spending Analysis (Dollar Amounts are in Billions) |
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Spending Category |
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Economy, Transportation & Infrastructure |
-$4.565 |
-$4.565 |
-$4.3 |
-$4.565 |
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Education, Science & Research |
-$60.056 |
N/A |
N/A |
$0.144 |
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Energy, Agriculture & Environment |
-$40.561 |
-$5.953 |
Unknown |
-$2.465 |
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Federal Government Reform |
Unknown |
-$1,173.0 |
-$383.409 |
-$647.158 |
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Health Care |
-$41.155 |
-$40.235 |
-$136.098 |
-$42.655 |
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Homeland Security & Law Enforcement |
$0.120 |
Unknown |
Unknown |
$1.148 |
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National Security & International Relations |
$0.052 |
Unknown |
$170.802 |
$30.591 |
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Veterans |
Unknown |
$2.704 |
N/A |
N/A |
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Miscellaneous |
N/A |
N/A |
N/A |
-$5.637 |
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TOTAL |
-$146.165 |
-$1,221.0 |
-$353.005 |
-$670.597 |
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Source: National Taxpayers Union Foundation |
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Key findings include:
- Romney's plans to reform the federal government -- including proposals to limit federal spending to 20 percent of GDP and to reduce the number of government workers over time -- would save taxpayers an estimated $383.4 billion per year. The area in which Romney would propose the largest budget increase is national security with a boost of $170.8 billion. (PDF version)
- Ron Paul’s single largest savings item is his multi-pronged effort to balance the budget – at $1.078 trillion in reductions, it is a stark reminder of the size of the current federal budget deficit. (PDF version)
- Newt Gingrich’s moon base plans would cost at least $4 billion per year. His vision for new rocket propulsion technology could not be quantified at this time. (PDF version)
- Rick Santorum’s largest individual savings item was signing off on a version of a Balanced Budget Amendment to the Constitution, which would save $519.6 billion per year. A major assumption was that Santorum would abide by the terms of the Amendment he backed, which calls for limiting total federal expenditures to 18 percent of Gross Domestic Product. (PDF version)
“The field of candidates has often changed over the past year, but their ideas for federal spending and savings will continue to be debated as the campaign season evolves,” concluded NTUF’s Director of Congressional Analysis Jeff Dircksen. “Through it all, NTUF will be monitoring the candidates’ proposals – including those of President Obama – to inform the vital national conversation about the future direction of Washington’s fiscal policy.”
Note: The detailed NTUF analyses of Mitt Romney’s, Newt Gingrich’s, Ron Paul’s and Rick Santorum’s federal budget policy platforms are available online at www.ntu.org.
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NTU Campaign Warning About Medicare Part D Rebate Scheme Draws Ire, Misinformation, from Partisan Interests
It looks like a tax, smells like a tax, walks like a tax, but unfortunately Austin-American Statesman’s “PolitiFact” felt the need to reach an unfair opinion on an NTU-sponsored ad warning of a new Medicare Part D “rebate” scheme that was little more than a tax in disguise. Now, it seems local Democratic Party activists are actively using PolitiFact’s article, and some dubious assumptions and claims about NTU, in an effort to mislead their neighbors on the negative impact the Medicare Part D rebate tax would have.
First of all, key facts were left unmentioned in the PolitiFact piece. For example, the fact that the rebate program fits with the Joint Committee on Taxation’s definition of an excise tax, or that NTU provided PolitiFact with numerous references either describing the measure as a tax or demonstrating its economic harm. Convoluted policy workings of Washington bureaucrats may make reality hard to decipher: the bottom line is that no matter what you call it, a mandatory 23 percent burden is the price that real, live people will pay in many ways.
Now, Letters to the Editor are popping up in local papers, written primarily by Democratic activists. These letters range from simply relying on PolitiFact’s verdict, to incoherent rambling and strange conspiracy theories. However, some of the accusations must be cleared up: NTU has no coordination with any candidates, nor do these issue-focused advertisements imply any endorsement of individuals. Any wild claims about “front groups” are just that, and designed to distract from the details of the issue at hand.
Several months before the ad ran, NTU cautioned that a Part D “rebate” plan was among several “disastrous debt ideas” bouncing around the Supercommittee. Members of Congress had advocated this debacle before, and President Obama included a version of it in his own Supercommittee recommendations. So we felt compelled to sound the alarm in a Dallas Morning News ad and make certain citizens kept encouraging lawmakers who might be opposed to the plan.
But even though PolitiFact gave some space to NTU's case for calling this proposal a tax, and seemed to concede some of the other points we made, the staff nonetheless branded our ad “false,” claiming “Obama's urged rebate remains that--money paid in return for a purchase or action/opportunity. One would have to connect more dots to make it a tax.” Well, here are some of the many dots NTU connected that deserved more mention in the piece.
PolitiFact’s central claim: “Outside experts said they’d never heard the Medicaid rebates -- or proposed Medicare rebates -- referred to as taxes.”
Yet NTU provided plenty of such references: Joseph Antos of the American Enterprise Institute who served on the Maryland Health Services Cost Review Commission, Guy King, former Chief Actuary for Medicare and Medicaid, former CBO Director Douglas Holtz-Eakin, and Grace Marie-Turner of the Galen Institute. Antos, for example, noted that, “The so-called rebate isn’t a rebate at all. For a large number of Part D patients, it’s going to function as a tax.” Holtz-Eakin, along with Michael Ramlet, wrote, “In the end, not only will the cost of a new government rebate, like any tax, be borne somewhere else in the economy, but … seniors will also be forced to pay much higher premiums for their prescription drug plans.”
PolitiFact duly reported our contention that the "rebate" is based on a percentage of price-per-unit, a lot like the way some excise taxes on products such as certain tobacco items work. But here's the rest of the story. Calling the proposal "money paid in return for a purchase or action/opportunity," as PolitiFact does, is an inadequate explanation. That's because the rebate is levied on an ad valorem basis, not in exchange for a service. This is an important consideration: the "rebate" is on the sale of a specific product, using a specified value of the product. That is the basic definition of how an excise tax works. In fact the Joint Committee on Taxation describes an excise as such: "taxes imposed on a per unit or ad valorem (i.e., percentage of price) basis on the production, importation, or sale of a specific good or service.”
But aren’t taxes mandatory when this rebate isn’t? Not when Washington rigs the rules. As we told PolitiFact, federal and state government programs are capturing an increasingly dominant share of the prescription drug market (about 30 percent for Medicare and Medicaid, more when VA and government employee programs are added in). This has been especially true since the creation of the Medicare Part D benefit. It's one reason why we opposed the Part D program in the first place. For Congress and the White House to legislate more influence over drug-purchasing in the United States, and then say, "well, if you won't pay our latest kickback demands you can't sell in the empire we've created" is coercive.
Transparent political mud-slinging is unfortunate, but predictable when an organization seeks to shine the light of truth on a destructive policy that has been cleverly buried in a complex bureaucracy to prevent citizens from realizing that they are about to be hit with an unfair new burden. When the people implementing this destructive change are the types who profit politically by touting their uncompromising stewardship of the program, unseemly political tactics are unavoidable.
Throughout NTU's 40-plus year existence, one central part of our mission has been calling politicians to account when they create a plan that works and hurts like a tax, but refuse to call it a tax. Our effort against the 23 percent rebate is certainly not the last time we’ll be fulfilling that mission.
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Kicking Off the 2011 Election Season
Even though it is still October, the fall election season is upon us. This Saturday, Louisiana kicks off a month of elections that will close on November 19th. In addition to the slate of candidates for local and state offices, voters in the Pelican State will also decide on five amendments to their constitution this weekend. As we do each year, NTU tracks these ballot measures in our General Election Ballot Guide in order to give taxpayers a better idea of what they are being asked to vote on.
The one measure with cause for concern is Amendment 1. From our ballot guide;
“Amendment 1 on the statewide ballot would redirect future tobacco settlement funds from the Millennium Fund to the Taylor Opportunity Program for Students (TOPS) scholarship. Additionally, the proposed amendment would permanently extend and place in the constitution a $.04 per pack cigarette tax set to expire next year.”
Generally speaking, state constitutions should be used to limit what kinds of taxation are allowed, and to set limits on the level of taxation. Rarely is the constitution used to set the specific rate. This measure would make it substantially more difficult for voters or the state legislature to reduce their tax burden in the future.
Furthermore, the Millennium Fund is Louisiana’s account to handle Tobacco Master Settlement Agreement (MSA) funds. The primary purpose of the MSA is to offset state Medicaid expenditures related to tobacco use. Amendment 1 would stop using future tobacco settlement payments for health care expenditures and redirect them to a wholly unrelated program. This gets away from the fundamental purpose of the MSA and taxpayers should be wary.
Fortunately, the remaining measures on the ballot are commendable efforts in fiscal responsibility. Amendment 2 would use one-time monies generated by natural resource development to start paying down the billions of dollars in unfunded state pension liabilities. Louisiana has roughly $9.5 billion in legacy obligations from its pre-1988 employee retirement plans. This amendment is an honest effort to meet those obligations without raising taxes. Amendment 3 creates a lockbox around the Patient Compensation Fund, so the legislature cannot raid it at will. Amendment 4, while somewhat confusing, simply sets some useful guidelines for refilling the state’s budget stabilization fund. The last measure is a technical correction.
As we say at the top of our guide, these off-year elections can too often be forgotten amidst the noise of the 2012 Presidential race, or even a classic SEC showdown. Bayou State taxpayers need to be on the lookout and hopefully NTU’s 2011 Ballot Guide can help.
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Don't Be Fooled By Obama's New Debt Deal
Who knew “The Who” would be such prescient political philosophers? As the media swoons over Obama’s offer to cut Medicare spending and reign in the cost of Social Security (he’s soooo bipartisan!), I can’t help but be reminded of The Who’s “Won’t Get Fooled Again.”
“Change it had to come
We knew it all along
We were liberated from the fall, that’s all
But the world looks just the same
And history ain’t changed
‘Cause the banners, they all flown in the last war
…We don’t get fooled again!”
You’ll have to pardon their syntax, I think rock legends are allowed a little leeway when it comes to grammar, but those lyrics pretty much sum up exactly how I’m feeling about Obama’s newfound willingness to address entitlements: I won't get fooled again!
According to the Washington Post,
“Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.”
First, let’s understand this “dramatic action” is probably more accurately described as “teensy weensy action.” According to the Washington Post story, the White House is now “seeking a plan that would slash more than $4 trillion in annual budget deficits over the next decade.” That sounds big, but not compared to the $46 trillion the Congressional Budget Office expects the federal government to spend over the next ten years.
Second, when it comes to Washington, never take the future for granted. As Senator DeMint told the Washington Times, “We agree we need immediate spending cuts, caps and entitlement reform, but that’s exactly what Washington did in the 90s when we were $5 trillion in debt. Now Gramm-Rudman is ignored, the entitlement reforms never materialized, and debt has exploded to over $14 trillion. Americans won’t be fooled again; they know none of these grand promises will ever happen unless we force Washington to do it with a balanced-budget amendment.”
In fact, recent history is littered with the carcasses of failed budget deals, in which spending reductions, and even entitlement reforms, are offered up in return for higher taxes. Inevitably, the result has been the same – the spending cuts never materialize, Congress loses its stomach for politically difficult reform, and the taxes stay the same.
Given that it is apparently big news that Obama has shown a willingness to cut Medicare, let’s take a glance back into history to search for parallels. Fortunately, it is not very difficult. Nearly every budget deal for the last 30 years has involved some tweaks to Medicare and Medicaid as a way to score big, but illusory, savings.
One of the most (in)famous was a 1990s deal between President Bill Clinton and Republican Congress called the Balanced Budget Act. Part of the compromise is the now infamous “doc fix” - an attempt to control the growth in Medicare spending. Except it never materialized. The law tied physician pay to increases in the economy, but since health care spending grew twice as fast as gross domestic product, the provision meant doctors faced huge pay cuts. This led to an annual ritual of complaining by the American Medical Association, Congress voiding the mandated cuts, and enormous growth in the size of the annual “doc fix” that must be dealt with.
The Obama cuts will be no different. He’s reportedly considering further reduction in payments to providers, cuts to support physician-training programs, and changes to Medicare’s prescription drug benefit. But when the politics become tough and when the lobbyists get cranking you can bet Washington will fold like a cheap suit.
The fact is, none of his proposed reforms can be guaranteed to take place beyond 2012 because there is no way to bind future Congresses; unless that is we pass a balanced budget amendment.
Until I see that, I, Like The Who, won’t be fooled again.
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Congress's Motto-Fix It in Post
If that isn't already Congress's motto, it should be. An AP story out today reports that due to a little-known provision in the health care bill that a "married couple could have an annual income of about $64,000 and still get Medicaid." An additional 3 million people could qualify for Medicare in 2014, and that worries Medicare's chief actuary. Others don't seem quiet so worried. According to the story:
A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there's plenty of time to fix it later.
"These changes don't take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans," said Erin Shields.
It's one thing to digitally edit out a movie gaffe or rerecord a bit on inaudible dialogue, but wouldn't it make sense to know what the legislation that you're passing does before you pass it? It sounds a bit naive I know, but isn't that better than having to keep correcting the goofs in post?
HT: Demian Brady
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Ryan's Adult Conversation a Sharp Contrast to Dem's Mediscare Tactics
Recently, former President Bill Clinton warned Democrats that they were “going to have to be willing to give up, maybe, some short-term political gain by whipping up fears” about Medicare.
“Whipping up fears” is the nice way to say it. Given that Democrats recently came out with a political ad depicting a Paul Ryan-esque figure literally throwing an elderly woman off of a cliff, scaring the ever-living-bejesus is probably a more apt way to describe it.
Such partisan demagoguery makes a mockery of the very real problem we face. It’s based on a calculation that emphasizes the short-term political success of their party over the long term financial well being of our program.
Fortunately, Republicans are taking a different tack. In a new video: Saving Medicare: Visualized, Ryan ignores the impulse to treat voters as children, opting instead to have an adult conversation about the unsustainable trajectory of Medicare spending and its impact on our debt. Unlike the cheap gimmick of throwing grannie off a cliff, Ryan’s video evokes fear based in reality – that without reform Medicare will bankrupt our country.
In an op-ed in today’s Wall Street Journal, Thomas Saving and John Goodman, a former Medicare trustee and the President of the National Center for Policy Analysis respectively, unveil just how unsustainable the Democrats’ vision for Medicare is. Recently, House Minority Leader Nancy Pelosi said Democrats have already “[given] the blueprint for how we strengthen Medicare in the Affordable Care Act.” But Saving and Goodman argue that any “strengthening” was nothing more than a parlor trick.
“In terms of the sheer dollars involved,” they argue, “the law’s reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today's 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.”
Once you leave the fantasyland of the written page, paying less to providers will have enormous real world consequences. Reduced payment rates will reduce the amount of doctors who will accept Medicare patients, making it harder for seniors to find a doctor. Once admitted, they will likely face reduced amenities, a lower level of care, and reduced treatment options.
The fact is, there is just no getting around the absolute need to reform Medicare. Democrats can continue to ignore the problem and choose to maximize their political gain by preying on the fears of older voters. But with America teetering on the edge of financial ruin, how much longer can they afford to play these games? After all, what good is winning an election, if you have to force the nation into default to do it?
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Despite Clinton's Warnings, Democrats Demagogue Medicare Reform
Many Democrats are wrongfully hailing the New York special election as a critical victory over Rep. Paul Ryan’s Medicare reform plan. They’re beginning to see how Medicare demagoguery and scare tactics could be a potent recipe for winning big in the 2012 elections. But at what cost?
That’s the question that former President and respected thinker Bill Clinton has apparently been asking himself. Speaking yesterday at a fiscal summit hosted by the Peter Peterson Foundation, Clinton said, “I think the Democrats are going to have to be willing to give up, maybe, some short-term political gain by whipping up fears on some of these things – if it’s a reasonable Social Security proposal, a reasonable Medicare proposal. We’ve got to deal with these things. You cannot have health care devour our economy.”
Sadly, thus far Democrats have appeared either unwilling or unable to look past the 2012 elections, regardless of the disastrous long-term consequences that might entail. Take Senate Majority Leader Harry Reid who used his time on the Senate floor to say, “The Republican plan to kill Medicare is a plan to make the rich richer and the sick sicker.”
Quotes like that seem to confirm President Clinton’s fears about his party’s misreading the New York tea leaves. In a candid conversation caught by ABC News, Clinton was overheard telling Ryan “I’m glad we won this race in New York, [but] I hope Democrats don’t use this as an excuse to do nothing.”
Nothing appears to be exactly what Democrats plan to do. When asked what her plan was for Medicare, House Minority Leader Nancy Pelosi responded, “It is a flag we’ve planted that we will protect and defend. We have a plan. It’s called Medicare.” In other words, their plan to reform Medicare, is, well, to leave it alone.
Although that may be good politics in the short-term, it would represent a financial disaster in the long-term, threatening the existence, much less the benefit levels, of the Medicare program liberals are claiming to be such stalwart advocates of. According to the 2011 Medicare Trustees’ report, the Hospital Insurance trust fund will run out in 2024, five years earlier than last projected. In addition the report argues that the Democrats’ Patient Protection and Affordable Care Act has done little to improve Medicare’s actuarial future. The report states,
“By the end of thelong-range projection period, Medicare prices . . . would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees. . . Well beforethat point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”
Is that really the future that Democrats want to fight for tooth and nail?
After Rep. Ryan expressed how disheartened he was that the New York race would likely lead to paralysis for his plan, President Clinton said that Ryan should “give me a call.” I don’t think it’s Ryan who needs the talking to. Unfortunately, it’s the Democrats who need a talkin-to.
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