The Government Tells Another Healthcare Whopper

August 24, 2010
Category: Uncategorized

iStock_000006562788XSmall—which the New York Times, the American Association for Retired Persons (AARP), and others fall for….
Earlier this month, Medicare’s trustees published their annual report. In response, NYT’s Paul Krugman crowed that Medicare was in better financial shape than previously thought and that “health reform was the biggest move toward fiscal responsibility in a long, long time.” AARP agreed, and stated that “the [Medicare] program is financially strong in the short-term and can be strengthened in the future with relatively modest adjustments.”

Other news stories picked up this same theme, declaring that Medicare was in better financial shape than expected because of the health reform act, and would be sound for years to come.
Not so fast. In response, and for the first time in Medicare history, the Medicare Chief Actuary called the trustees’ projections “unreasonable” and “implausible,” and encouraged everyone to ignore them and view instead an illustrative alternative report:
The Trustees Report is necessarily based on current law.…However, the projections shown in the report do not represent the “best estimate” of actual future Medicare expenditures.
What does all this mean? Why is the chief Medicare actuary calling the official Medicare report nonsense? You will recall that the non-partisan Congressional Budget Office reported that the new national healthcare legislation would reduce the budget deficit. It had to do this because it was required to use a misleading ten-year projection period (with revenue starting early and expenses later) and to assume that Medicare expenses would be drastically cut, along with other unrealistic inputs. The new Medicare report was false for the same reason: it assumed Medicare cuts that everyone knows will never happen.
Economist John C. Goodman, PhD, reports that the health reform law’s Medicare provisions, if unchanged, would cause:

  • Cuts in Medicare spending of $575 billion over the next decade;
  • 7½ million members of Medicare Advantage plans to lose their coverage and cause another 7½ million to face higher premiums and benefit cuts;
  • About one in seven facilities—hospitals, skilled nursing facilities, home health agencies, and hospices—to become unprofitable and possibly drop out of Medicare altogether; and
  • Many more doctors to quit seeing Medicare patients entirely.

The Medicare Actuary’s alternative report says that the number of facilities that would become unprofitable will grow to 25% by 2030 and 40% by 2050 if the health reform law is implemented as written.
This is not actually the first time that the Medicare Actuary has disagreed with a Medicare report, although it is the first time that the Actuary has spoken up. Back in 2003, the Medicare Administrator told Congress that the proposed new prescription drug benefit for seniors would cost $400 billion over ten years. Later it turned out that the then Medicare Chief Actuary had told his boss that this was a lie, that the best estimate was $534 billion, but was told to shut up if he did not want to be fired. It was widely agreed that the bill would not have passed with the correct estimate.
Six month later, the estimate was quietly raised to the higher figure. And when all this came out, the Medicare Administrator was not disciplined or punished, even though he appeared to have engaged in fraud.
This is the basic problem. Private businesses knowingly releasing false information can be sent to jail for fraud. Governments release false information all the time with seeming impunity.
The British governor of Hong Kong in the 1960s, Sir John James Cowperthwaite, famously refused to allow his government to compile or release economic statistics. He said that they would just be manipulated and misused, and would provide excuses for misguided government actions.
Perhaps Cowperthwaite had a point. Hong Kong boomed under his administration. When he took over, the average resident of Hong Kong had just over a quarter of the income of an average Briton. According to Swiss financial analyst and advisor Dr. Marc Faber, by the time the Chinese took over in 1997, the average Hong Kong resident had 137% of the average Briton’s income.
There are reasons to doubt many government economic statistics (e.g., inflation and unemployment), not just those about healthcare. With all due respect to Cowperthwaite, it would be better to have statistics, but ones that we could trust.

14 responses to “The Government Tells Another Healthcare Whopper”

  1. Ronald Maxson says:

    I assume you will forward this to Dr. Krugman. I’d be interested in his response.

  2. jack eich says:

    all we need to do is change our diet to a plant based diet and cancer and a lot of health problems will dissappear. meat and fats are resonsible for 90% of health problems

    • elle says:

      Jack,
      you need to do some more research, fats are essential for the human body to function correctly, it is the type of fat we consume that makes a HUGE difference as well as what is in/fed to the meat animal. If you are interested look at the Weston A Price foundation http://www.westonaprice.org/ . Their findings are quite contrary to all the hype.
      Dr. Mercola has more info as do Dr. Johnathn Wright and Dr. WC Douglass.

    • Tom Gross says:

      Meat-heads and Fat-heads like you make up statistics and make wide sweeping conclusions to advance their personal agendas. Perhaps we should mistrust the governments statistics and trust yours! Cleaning up our diet goes well beyond reducing meat and fat and the plethora of degenerative health conditions is far more complicated than diet alone. Most vegans I have evaluated have at least 1 or more types of anemia. Anemia promotes free radicals by reducing aerobic energy production. Free radicals promote degenerative conditions and cancer.

      • Steve Roos says:

        Tom – hell yeah we should mistrust government stats.
        I personally wouldn’t believe anything the FDA or any government agency says. They’re all in bed with big pharma, which means they manipulate data to make us unhealthy in order to sell more drugs.
        Take the fake “Food Safety Bill S510 as an example.
        I respect the value of fruits and vegetables, but I don’t advocate a vegan diet.

  3. Zyxomma says:

    This is yet another reason we should have single payer, and yet another reason why CAM practices and practitioners should be covered!

  4. Bud Stuart says:

    May I nominate the Medicare Chief Actuary for a Nobel Prize??

  5. Freedom of choice is most important! Free choice is the very foundation of freedom.
    Please continue to preserve all you can!

  6. Lou says:

    The simple, somewhat painful, truth is that if Medicare were totally abolished and most elderly people learned they could substitute salubrious foods, habits and walking for the toxic, drugs the health of this country would VASTLY improve.
    We are paying big pharma ten dollars on the dime, to kill off our parents.

  7. Sandra Mannelli says:

    Insurance coverage has done nothing to lower the cost of medical treatments. In fact it has added to the cost of treatments. For example, a particular medication I was on cost 500 per month cash. Expensive yes, because our FDA will not allow generics for this medication, tho it has been out for 20 years. When I have my ins pay for it and see their bill, they pay over 1300 per month for the same medication I can buy for cash at almost a third of the cost. What is going on? Are insurance companies vested in pharmaceuticals and medical procedures? Does a CEO of a particular insurance complany have stock or a relative working in the pharmaceutical industry whose back they scratch?
    Do people not get that we all paid for years when we were healthy, but we got no refunds for unused ins premiums for coverage. Now that we may need it to cover us, we are denied or given inferior treatment or treatments known not to work (chem, radiation for example).
    If one calculates all the years when they were young and healthy, that they paid for medical insurance, do they really believe it adds up to saving for future medical treatments? The very treatments being denied to them now, and more denials yet to come?
    I will never understand why people think insurance of any kind is a good thing. It is an industry that preys on our fears of the unexpected and forced into law against our will (well, at least mine). I realize some people prefer medical insurance. Since my insurance denies most treatments and even denies x rays and dentals with a life time cap that when reached, will not ever pay for anything again yet I must continue payments. What kind of plan is that?
    We need to examine our desire for insurance of any kind in the medical field or elsewhere. I have never made a claim on my home owners ins, on my car ins, never had surgery, etc. Were to choose I would not have ins of any kind. Just think how much money I would have if I had never paid for years of medical ins when I was young, and add that to all the other types of ins we as citizens are forced to pay, add the bordeon of new undocumented illegal immigrants that our feds feel we should support, add the poor economy and 35% income tax, property tax, etc. Not a good deal, period.
    I say insurance is the problem. Affordable medical treatment should be what is reformed, not more and more profits for the insurance companies. And now medical ins too is law? Wow, I want a job/income guarantee like that!

  8. SANDI says:

    I CAN’T BELIEVE MY EYES…..HOW CAN ANYTHING BE ANYTHING BUT PROJECTION….THE HEALTH CARE PLAN HAS NOT GONE INTO EFFECT, YET. AARP DENIED ME SUPPLEMENTAL INSURANCE COVERAGE BECAUSE THE WINDOW FOR OPEN ENROLLMENT CLOSED AND NOW
    I AM DONG THE MEDICARE SHUFFLE BACK AND FORTH WITH THE DEPARTMENT OF INSURANCE INVOLVED. IS THIS HOW THEY ARE SAVING MONEY…DENYING ACCESS TO AMERICAN’S.
    MAYBE THEY FELT SORRY FOR OBAMA AND HIS OPTIMISTIC ATTITUDE TOWARD FISCAL RECOVERY, TOO. HOWEVER, HE WAS SWIMMING IN THE GOLF WITH HIS CHILDREN AND SAID, “HEY, COME ON IN…THE WATER IS FINE AND NOT A DROP OF OIL ANY WHERE.”
    IT IS ALL ILLUSION…… ISN’T IT.
    I’M GOING TO TAKE VITAMIN D AND LET THE CHIPS FALL WHERE THEY MAY
    JUST READ IN THE HUMAN GENOME PROJECT FROM THE UK-FRANCE. VITAMIN D IS LINKED TO 200 GENOME AND DEFECIENCYS CAUSE MS, ALZHEIMERS, CHRON’S DISEASE AND MS…..THE MS FOUNDATION SHOULD HAVE SPENT 5 MILLION OF VITAMIN D INSTEAD OF NONPROFIT SPENDING OF DRUGS. I WOULD ALSO SAY THAT VITAMIN D IS VERY IMPORTANT, TOO.

  9. Enrique & Laura Dovalo says:

    We have no health insurance since 2008, it cost us a lot of money every month and on tap we had to pay a big chunk from our salary to pay part on prescriptions, and doctor’s visits. We stop using health insurance, we are not 100% vegans, but we try very hard not to eat hormone, antiviotic, very bad animal abuse meats, including chicken with arzenic, fish with lead and mercury, fruits that are spread with chemical, etc. It is true all, of us are going to die but why should us be force to die by the lords of FDA, MONSANTO who want us to get sick with their wrong practices only for their own profit and power without caring for the human kind. I bet you that this trillionairs do not use their practice for themselves. The are destroying the world by forcing farmers use their generic modify seeds and stilling the farmers land with force or with harrasment just for money & power by buying the law courts, and even supreme courts and abusing farmers for the same “power and money”. Enough is enough. We still lucky that can still use the internet, very soon we are going to be able to have freedom of speach due to the fact that the USA CONSTITUTION is being secrettaly change. Don’t be surprise and be aware!!!!

  10. I judge insurance is imprescindible to anyone to whippy a disquiet unoccupied vivification. But today´s rates are fitting too lycee!

  11. oro euro says:

    Giving a prize that is supposed to promote world peace to someone having nothing to do with it is sheer stupidity.

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