No Magic Bullet to Control Entitlements
Speaking at an event this morning regarding the Center for American Progress’ new health and entitlement manifesto (about which more later), former Obama Administration official Zeke Emanuel claimed that controlling health costs by itself would cure America’s fiscal woes: “I think this is the legacy for the president because if he can get healthcare costs under control, everything changes….This really is the big kahuna for his legacy going forward.”
It’s a nice assertion – but it’s also flat wrong. The Congressional Budget Office’s long-term budget outlook includes a chart (attached below) demonstrating that, over the next 25 years, demographics count for at least half – and as much as three-quarters – of projected increases in spending on Medicare, Medicaid, Social Security, and Obamacare insurance subsidies:
What this analysis means is that, even if the growth of health costs does manage to slow (both CBO and the Medicare actuary think Obamacare’s cost reductions will not be sustainable in the long-term), slowing health costs alone won’t solve Medicare’s financial problems. Put another way, Medicare needs structural reform NOW – because nothing else can save the program. Emanuel’s incorrect comments notwithstanding, it’s a lesson policy-makers in both parties would be wise to heed.