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Obama: Cut to spend more on health care

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POSTED: June 24, 2009 10:08 a.m.
Where does Newt Gingrich go to get his apology? He proposed slowing the rate of growth of Medicare and Medicaid in the mid-1990s and was clobbered by Democrats and the press for waging war on the elderly and the indigent.
Now, almost every other day, Barack Obama finds another hundred billion dollars to cut out of Medicare and Medicaid. He just announced the discovery of another $313 billion in savings over 10 years, on top of $300 billion he had already proposed. Soon enough, he will make Gingrich — who infamously sought $450 billion in savings over seven years in 1995 — look like an extravagantly generous steward of the nation’s health programs.
No liberal outcry greeted Obama’s proposed budgetary savagery because everyone knows it’s in the cause of more government spending. Obama must embrace a simulacrum of spending discipline to have any hope of passing a health-care program that will cost at least $1.2 trillion over the next 10 years. The game is simple: Pretend to cut so you can spend.
Medicare and Medicaid spending has steadily outpaced inflation through the decades, and accounts for 23 percent of the federal budget. Medicare’s unfunded liability is an astonishing $89 trillion. As Obama put it in his speech to the American Medical Association, there’s a risk the programs will “swamp our federal and state budgets, and impose a vicious choice of either unprecedented tax hikes, overwhelming deficits or drastic cuts in our federal and state budgets.”
Sounds alarming. So why turn around and immediately spend the $600 billion in savings? Shouldn’t it be used to shore up the rickety finances of these already-existing health programs rather than to create a dubiously financed, entirely new health program?
Obama’s Medicare and Medicaid savings will be sustainable over time only by beggaring doctors and hospitals. Compared with the private system, Medicare pays only 81 cents on the dollar for health expenses; Medicaid pays 56 cents on the dollar. Obama relies on the tried-and-true practice of cutting payments more. This means there will be fewer doctors accepting Medicare and Medicaid patients, and more cost-shifting to the private system to make up for deficient government payments.
When Obama himself says that the federal deficit is “unsustainable,” and when the chairman of the Federal Reserve warns that spending cuts or tax increases are necessary “to stabilize the fiscal situation,” it’s obviously not the time for a new entitlement program and another $1.2 trillion in government expenditure.
If Obama thinks he can responsibly squeeze a couple of hundred billion out of Medicare and Medicaid, fine, he should do it and pocket the savings to improve the long-run fiscal picture. And we can adopt modest reforms to make it easier for people to get and keep health insurance, reforms with zero risk of tipping the country further toward fiscal ruin. Obama will then have more time and energy to devote to repairing the government’s balance sheet. Newt Gingrich ought to have some ideas how to do it.

Lowry is editor of the National Review.
 

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