–Cuts to Medicare vs deficit spending

An alternative to popular faith

I just received a note from Mark Kirk, Republican Congressman, listing the cuts to be made in Medicare. I don’t know how factual they all are, because frankly the new program not only is complex, but evolving.

In any event, this is what the Republicans (and Democrats) should work on, rather than the “repeal and replace” political effort that has no chance to succeed. Forget the McCain, “There will be no cooperation for the rest of the year” attitude. Focus on correcting the negatives rather than throwing out the baby with the bathwater.

By the way, every one of these cuts could be eliminated if wrongheaded, deficit paranoia were eliminated. The federal government can and should pay, via deficit spending, to eliminate all these cuts. Consideration of real damages to real people should take precedence over imaginary, unproven damage from federal deficits

Here is what Rep. Kirk wrote:

2010: Medicare Cuts to Hospitals: The federal government will reduce Medicare reimbursements for hospitals who provide seniors with long-term and inpatient and rehabilitation care.

2011:Medicare Advantage Cuts Begin: Approximately 121,000 Illinois seniors will be dropped from their chosen Medicare Advantage coverage. Drug Discounts for those in Medicare Part D “donut hole” begin: The federal government will impose a new requirement on pharmaceutical companies to provide a 50% discount on “brand name” prescriptions. Increased Medicare Part D Premiums: Seniors with incomes above $85,000 for individuals and $170,000 for couples will be forced to pay higher Medicare Part D premiums. Medicare Imaging Cuts: The federal government will cut Medicare reimbursements for seniors who use MRI and CT scans. Medicare Cuts to Ambulance Services and Durable Medical Equipment: The federal government will begin cutting Medicare reimbursements for seniors who use ambulances or durable medical equipment.

2012: Medicare Cuts for Hospitals with Readmissions: The federal government will cut Medicare reimbursements to any hospital with a high readmission rate. Medicare Cuts for Hospice Care: The federal government will cut Medicare reimbursements for seniors on hospice care. Medicare Cuts for Dialysis Care: The federal government will cut Medicare reimbursements for Americans – both youth and seniors – on dialysis.

2014: Medicare Board Cuts: The federal government will establish an Independent Payment Advisory Board with powers to make further cuts to seniors on Medicare.

2015: Medicare Home Health Cuts: The federal government will cut Medicare reimbursements for seniors who depend on home health care.

I’d be interested in hearing from those of you who think reducing federal deficits is more important than eliminating these cuts, together with your evidence that deficits are harmful in any way.

Rodger Malcolm Mitchell

3 thoughts on “–Cuts to Medicare vs deficit spending

  1. In regard to the cuts on Medicare this really isn’t anything new. Congress has done these cuts in the past. My guess is that these cuts are not a means to reduce the deficit. Rather, the hope is that these cuts will cause the receiver (doctor/hospital) of this money to do the same amount of work but with less. And isn’t that what a demand sider believes? After all, if adding money on the demand side can increase demand and thus price, why can’t a forced reduction in demand (through reduced subsidies) reduce price? (Sorry, my understanding of the demand side of things is lacking.) So, what the government is trying to do is set price floors and ceilings without actually spelling that out. Somehow the “nearly free market” is supposed to interpret these payments to a certain level of service. And they fail at it over and over, giving up in regard to the government payor and instead sticking it to the insurance and private payor.

    To your larger point though is any cost too high for any of this medical care? If a person needs a kidney transplant is it okay for the federal government to pay $10,000? Is it okay to pay $100,000? How about $1,000,000? Or even $100,000,000,000? According to your question there should be no limits on price since deficits don’t matter. And at what cost do we decide that a person shouldn’t get medical care and live? Is there a limit?


    1. TheInterest,

      “[…]a forced reduction in demand[…]” Is it your hypothesis that cutting payments to doctors and hospitals will reduce the number of sick people seeking help?

      There is no magic in economics. Cutting payments to doctors and hospitals will reduce the availability of doctors and the services of hospitals. Period. And yes, these cuts are a means to reduce the deficit.

      A friend had a hip replacement by the best surgeon she could find. He doesn’t accept Medicare (Guess why.) So she paid him $20,000 cash, rather than use a doctor she believed less skilled, who does accept Medicare.

      You will see fewer and fewer doctors accepting Medicare.

      And if you feel there are too few nurses available to answer your call button, wait until payments to hospitals are reduced further.

      I’ve never said deficits don’t matter, nor do I believe it. ( See item #12 at https://rodgermmitchell.wordpress.com/2009/09/07/introduction/ )

      Medicare doctors should receive the same fees as other doctors. The insurance industry has found a way to pay doctors and hospitals fair fees, and still be profitable.

      The problems with our health care system were not caused by “excessive” fees paid to doctors and hospitals. So, those problems cannot be cured by cutting fees.

      By the way, you’ll notice no one has supplied “evidence that deficits are harmful in any way.” I can assure you, no one will.

      Rodger Malcolm Mitchell


      1. Remember, we’re dealing with Congress here. Rules of economics don’t apply. I do feel that people in Congress think that if 100 people need a service and right now we pay $10,000 for that service, if we instead pay $1,000 for that same service the cost of that service goes down from $100 per person to $10 per person. They do believe in economic magic. Some still think we are on a gold standard. And some know we aren’t, but act like we are anyway!

        I need to review your limitation on the deficit though. BTW, the link in the above reply didn’t work. As I recall, I was a little foggy on that when reading the book too.


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