Medicare Magic

The wonders of government accounting.  Today the good folks in Washington announced that the Medicare Hospital Trust Fund will not run out of money before 2029.  That’s great news for seniors who don’t plan to live more than another 19 years. After that, all bets are off.  In fact they may be off way before that.  

The announcement by Treasury Secretary Timothy Geithner put a happy spin on what is really a somber picture. The administration, not surprisingly, gives the much maligned Obamacare healthcare overall credit for creating the savings that gives the Fund its new lease on life. Those apparent savings result from reduced benefits for the seniors the program was designed to help. These were the program improvements that senior lobbying organization AARP actively supported.  With friends like the AARP working on their behalf, seniors won’t need an assisted suicide law to accelerate their deaths. So maybe a few cuts now will help the program last longer, albeit with fewer benefit for its supposed beneficiaries. What’s the point of going to the hospital if you’re going to die anyway in 10 or 15 years.

A couple of important details, along with some elderly Americans, were buried in the announcement. First the news relates only to the “Hospital” fund, not to the fund that pays for doctor services which will remain solvent as long as doctors accept Facebook credits in payment, or to the Social Security Trust Fund which will run out of money the next time an auto worker retires.

In addition, Richard Foster, Medicare’s chief actuary, said that the Medicare savings that are supposed to make this good news possible might not be realistic. How much longer will Mr. Foster keep his job?  

But even if the savings were realistic, the administration plans to spend them on expanding Medicare coverage. There go the savings.  But what good is saving money if you can’t spend it on something else. It’s like you deciding not to buy a new car with money you don’t have and instead spending what you just saved by not buying that car on a trip to Paris.  But that’s pretty much how the federal government works.  It spends money it doesn’t have. Then announces it found savings in a program it didn’t have money for in the first place so that it can spend it on another program it doesn’t have money for.  

We just don’t realize how expensive it is to save money.