The Future of Medicare
Some people are excited because medical expenses decreased at a slower rate the last few years than previously forecast. That is helpful for Medicare, and some say it means Obamacare is working and eventually will help Medicare recover. Charles Blahous of the Mercatus Center disagrees. He’s also a public trustee for the Board of Trustees of Social Security and Medicare. He wrote a paper discussing Medicare financing and the effects of Obamacare in more detail. He says the slowdown in tax revenue from the financial crisis more than overshadows recent reductions in cost increases and that Medicare isn’t in good shape.
Study author Charles P. Blahous, a Mercatus senior research fellow and public trustee for Social Security and Medicare, notes that while it is impossible to definitively determine the cause of the health care cost slowdown at this time, the following points are clear:
1) The slowdown predated the passage of the Affordable Care Act (ACA) and isn’t primarily a result of it.
2) Most of the ACA’s projected effects on Medicare costs over the long term concern provisions that have yet to take full effect.
3) Medicare today is in worse financial shape than was projected before the cost slowdown began. The recession had a more severe impact in depressing Medicare revenues than it had a helpful effect on Medicare cost growth.
4) Current Medicare projections already assumed a substantial, long-term deceleration in national health cost growth—a slowdown much greater than what has transpired to this point.
5) Going forward, actual Medicare costs are much more likely to be higher than the trustees’ current projections than they are to be lower.
