Posted by
Defend America on Thursday, February 11, 2010 8:47:49 PM
Obama Budget Rigs Healthcare Numbers
By Andrew G. Biggs
Friday, February 5, 2010
For
the first time by any administration in memory, the Obama budget
forecast rejects the Medicare Trustees’ projections for long-run
healthcare cost growth. Why would the White House do this?
The Obama administration’s fiscal year 2011 budget
continues a pattern of ignoring independent analysis and rigging
economic assumptions to meet political goals. For the first time by any
administration in memory, the Obama budget forecast rejects the
Medicare Trustees’ projections for long-run healthcare cost growth. The
reason: the Trustees’ projections undercut the administration’s
narrative that increased federal control over private sector healthcare
could painlessly reduce Medicare and Medicaid costs. The Obama budget
instead assumes long-term health cost growth at twice the rate
projected by the Trustees.
The White House’s assumptions are factually implausible. Worse, they
threaten to politicize the Social Security and Medicare Trustees, whose
process for estimating entitlement costs has until now stood out for
its lack of political influence.
The budget’s long-term analysis projects Social Security, Medicare,
and Medicaid spending over 75 years. While past administrations have
sometimes used their own productivity and interest rate assumptions,
these changes generally have only minor effects. But all past
administrations, and even the Obama administration in its fiscal year
2010 budget, adopted the Social Security and Medicare Trustees’
baseline program-specific assumptions, including the rate of healthcare
cost growth.
These Trustees’ assumptions are generated in a process deliberately
insulated from politics. While cabinet members make up four of the six
Medicare and Social Security Trustees, White House staff do not attend
meetings of the Trustees working group and have no say regarding
economic or demographic variables. During my time at the Social
Security Administration I never saw politics influence how assumptions
were chosen.
The rate of health cost growth per beneficiary combines with
population aging, which swells the number of beneficiaries, to raise
overall Social Security, Medicare, and Medicaid spending. The Medicare
Trustees have for years projected that per capita health costs will
grow around 1 percent faster than gross domestic product. In health
experts’ lexicon, “excess cost growth” will equal “GDP plus 1 percent.”
The 2011 Obama budget, by contrast, assumes per capita health costs
will grow at GDP plus 2 percent, double the Trustees’ rate. The effects
of this change are staggering: the administration’s 2010 budget, which
followed the Trustees assumptions, projected Medicare costs of 9.6
percent of GDP by 2080. The 2011 budget, which uses White House
assumptions, projects Medicare will consume 22 percent of GDP by 2085.
http://www.american.com/archive/2010/february/obama-budget-rigs-healthcare-numbers