The Spectacle Blog

No, Obamacare Probably Won’t Improve Medicare Finances

By on 4.23.12 | 3:27PM

The liberal Center for American Progress claims that Obamacare will save both seniors and taxpayers money. The group's Think Progress site touts a new report by the Centers for Medicare and Medicaid Services (CMS) showing that taxpayers will save $200 billion and Medicare recipients $60 billion through 2016 courtesty of the Affordable Care Act.

Even this wouldn't be much in the context of Medicare's multi-trillion dollar shortfall. But if you read the fine print, Medicare's chief actuary doesn't think these projections are very realistic. Richard Foster pours the following cold water: "the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable)." Emphasis mine, hat tip Peter Suderman.

The reduction in physician payments isn't going to happen, at least not to the extent envisioned by the federal health care law. And the assumptions about health care productivity improvements probably won't pan out either, at least not to the extent necessary to make these projections realistic. It's like the old joke about economists trying to rescue themselves from a pit: "First, assume a ladder."

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