Jared Bernstein has posted some very important information that one can only hope both the White House and the Democrats are aware of and prepared to change direction because of. It shows that our runaway medical costs are actually slowing down and he posits that there’s good reason to believe that it’s permanent rather than transitory:
My colleague Paul Van de Water recently noted that CBO’s 10-year forecasts for the growth of Medicare and Medicaid have come down by $500 billion relative to those from a few years ago. We don’t yet know whether any of this will last—whether we’re looking at another “whoops” moment. But because the initiatives ticked off above are targeted at changing highly inefficient incentives embedded in the delivery system, using technology to improve productivity (which typically lowers costs), and providing better oversight, they certainly have the potential to be lasting. And remember, while the recession is surely playing some role in recent cost savings, that role is surely less pronounced in Medicare and hospital readmissions.
So my guess is there’s something lasting going on here, and that means the doctor has just prescribed a very large chill pill for those who want to whack away at Medicare and Medicaid and CHIP because “they’re going bankrupt…bankrupt I tell you!” They’re not, and our energies would be much better spent on careful research on the factors behind these recent cost trends and how we can build on them. The goal is not to diminish these extremely valuable programs. It’s to enhance their efficiency so as to ensure that they remain a solid part of American social policy.
Read the whole thing for the details.But the upshot is that we have just enacted a bunch of reforms to the system that are having an impact. Who knows if it will work over the long term, but the idea that we need to slash the hell out of our “entitlements” before all the data is in, is just daft. In fact, this whole discussion has been daft from the beginning. From the idea that austerity was a good idea in a downturn to the idea that we would make major changes to our health care system and then fail to see how they work before deciding that costs are too high, this rush to deficit cutting has been a disaster.
As Bernstein says, our leaders need to take a chill pill. We need to take a break from all the unnecessary Grand Bargaining and all the politicians need get out of this rut of thinking the world will end if they don’t cut spending. Obama’s legacy is going to be Obamacare. He doesn’t need the grand bargain, it was always stupid. And if Obamacare succeeds in reducing the deficit as Bernstein’s chart indicates may be happening, he can take credit for that too. That’s a lot. It’s enough.