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Steve Rattner put his ignorance on public display again in a column in the NYT. He told readers that counting the savings projected in Medicare as a result of the cost controls in President Obama’s health care reform as lowering the budget deficit amounts to double-counting. There is a simple word for Rattner’s claim: wrong.
The logic is simple. The Medicare program is counted as part of the overall budget. (If Rattner has other information on this point, he could do a great service by sharing it with NYT readers.) However, part of Medicare (Part A, which covers hospital insurance and most other medical bills of seniors) is also required to be funded by the designated Medicare tax. Any savings in this portion of the program will improve the finances of the Medicare trust fund and also reduce overall expenditures, thereby leading to lower budget deficits.
This really is not rocket science. We finance some categories of transportation spending from the Highway Trust Fund, which relies on revenue from the gas tax. If we reduced this transportation spending it both frees up money in the trust fund and also reduces the budget deficit. There is no double-counting here, it is just counting pure and simple.
It is bizarre that this accusation of double-counting keeps coming up. It is wrong and does not belong in a serious newspaper.
[btw, health care costs in the United States are a huge problem. If the elites were not such ardent protectionists, they would be looking to have free trade in Medicare and health care more generally.]
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Economist Dean Baker is co-founder of Center for Economic Policy and Research and writes regularly on CEPR’s Beat the Press blog, where this post first appeared.
12 Comments
It’s at the point where nobody can really believe economic-related commentary or reporting in mass media any longer …
how about “profit-taking”, (the 30% of the top) is a huge problem.
Ahem. Rattner’s claim is not “wrong.” Rather, it is a “talking point.” Talking points are neither right nor wrong. Rattner’s claim is his talking point, or rather that of a right-wing
propaganda mill“think tank.” Next week, he’ll have another of their talking points, and this one will no longer be subject to discussion. Geeezzz.Oh, and BTW, whom are you calling a “serious newspaper”? ;-)
You point out his “minor” credibility problem quite well – he says “credit this $1 trillion twice: once in calculating that the care law will generate more revenues than costs, and again in concluding that the Obama plan will chip away at the Medicare problem” – refusing to admit they are two unrelated questions. Money going to the trust fund or staying in the trust fund is still both revenue and an improvement in Medicare finances.
There was a double counting in the early run-up to the Senate vote on ACA, but this was very minor and fixed early on, and not the discussion today – today we have lies by the GOP -http://www.washingtonpost.com/blogs/fact-checker/post/sebelius-and-double-counting-of-medicare-savings/2011/03/11/ABeOaUR_blog.html
Note there is nor real double country in the answers to two very different questions. However we should note that Obama tries to pretend the questions are related and claim a twofer – never mentioning that the same money “cannot be simultaneously used” to fund the extra coverage for the uninsured and to also extend the Medicare trust fund, despite the appearance of this result from the respective accounting conventions for the two questions.
But more important, his major problem is following Chewney off the cliff of pretending to not understand pay as you go slightly funded social insurance being different from closed group funding over a working lifetime pension funding. The man needs an actuary real bad.
He says that “Medicare was underfinanced by a staggering $37 trillion as of Sept. 30….two and a half times the annual output of the United States economy — that would have to be deposited into the Medicare trust funds to adhere to the principle that members of each generation would contribute enough to Medicare while they were working to pay for their care after age 65″ – but there is no such principal in the system for the simple reason the GOP would not allow that level of funding – calling the idea, in the 1940′s Congress, “Socialism by the back door”.
So unlike other countries our Social Welfare funding can not be invested in productive assets in the country – it must be invested in government bonds, and that was the real threat Clinton posed in his pay off the debt plan. Greenspan saw that future Trust fund assets would have to be invested in real assets – “socialism” – and that had to be stopped at all costs.
Dean,
I watched Cspan’s Washington Journal on Friday the 13th. Yeah, I know. ;-) Here is one of the guests on the show and probably where the author of the false facts comes from:
His studies were revealed to be a joke on air by the people calling in.
So I immediately went to Wikipedia’s entry on Blahous:
He’s a typical wing-nut welfare recipient, except for that Ph.D. in “computational quantum mechanics,” which is pretty deep stuff. The rest is exactly what I’d expect from a Bush/Obama appointee to the board of trustees for what they call “entitlement programs.”
There is a simple word for Rattner: Asshole.
Thank you very much Dean Baker and FDL. I knew I could count on you for same-day debunking of Rattner’s sock-puppetry. It is seriously effed-up however that NYT allows this blatant crap to be printed in its pages. Rattner is such a loser. The Times bio slug at the foot of his op-ed implied he might have financial analysis experience because of his service in preznit’s “Treasury” dept but Rattner was merely one of the auto bailout dealmakers. He is Mike Bloomberg’s pet investment manager, but was ousted from Quadrangle for his lame pay-to-play attempts to corruptly sell investments to the NY state pension fund(s). He is the absolute last human on the planet anyone should trust to give honest accounting for any public trust fund.
Cutting benefits will not cut cost. Medical care will never be efficiently or effectively provided through the free market. Baker you are wrong and you clearly have no notion of how medical care and the professionals work. Most of the incentives you suggest are perverse,. The market even under ideal conditions only works for commodities that are not essential. Such as 7 foot basketball players and Ipads.
First abandon the goal of making huge profits for already wealthy businessmen. Hint: the goal is to cooperatively provide one level of care for all — good enough.
I notice that you are not at all discussing the fact that the ACA mandates that the Medicare program gets cut back by one half of a trillion bucks – 320 billion dollars.
Obama’s prescription: $320 billion in cuts to Medicare, Medicaid
By Phil Galewitz | Kaiser Health News
September 19, 2011
WASHINGTON — In his plan to trim the federal deficit, President Barack Obama on Monday proposed $320 billion in cuts to Medicare and Medicaid, largely by changing how the federal government pays health providers, by slashing payments to drug companies and by dramatically changing the way the government splits the costs of Medicaid with the states.
The biggest cut to Medicare would require pharmaceutical companies to lower their rates to some beneficiaries. The proposal would save Medicare an estimated $135 billion over 10 years starting in 2013. The change would allow the federal government to receive the same brand-name and generic rebates for low-income Medicare patients as are provided to Medicaid beneficiaries.
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Now this was touted in liberal, Obama-Worshipping circles as a good thing, with the notion being that it would be bad to make up this money by requiring seniors to see increases in the price of their care. But the fact is, way way back in the mid nineties, the health providers including the primary physicians for the elderly were already refusing to add new patients, as they couldn’t afford the small amounts that government was giving them as MediCare payments.
In 2008, Candidate Obama had proposed helping keeping social programs up and running by having a one quarter of a penny tax on each stock transaction. But as President, he doesn’t want to upset the Republicans. SO that idea seems to have faded away – despite the fact that even a quarter of a red penny on each stock transaction would end up fattening the government’s coffers.
SO what will happen in the end is that although seniors will not face an uptick in their payments, they will also not have many (if any) doctors available to them. Which is a pretty nasty situation.
Universal Single Payer would have been the best option, and a much more relevant Obama (The one from way back in 2004) even said that out loud. But that man has gone away, and President Obama seems to feel the need to cut the government spending more than sticking it to the group of rich elitists who were the beneficiaries of the now extended Bush tax cuts.
We’re going to constantly be told Medicare and Medicaid are too expensive especially since we had to bail out Wall St with tens of trillions.
Have you been following the INET conference in Berlin? I would love to hear you take on this.