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View Diary: America’s health care cost slowdown and the disappearing debt (66 comments)

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  •  So I click on the CBO report (2+ / 0-)
    Recommended by:
    Jon Perr, hmi

    and the very first page (the chart) negates your title ("disappearing debt"). Te debt is not disappearing but rising dramatically in the next few decades, and is projecting to top 100% of GDP in 2040. A level not seen since the Great Depression. Or am I missing something?

    •  See The Third Chart in the Diary... (7+ / 0-)

      ...to get a better illustration of the issue here.  That's the chart that shows "Projected Medicare Spending as a Percentage of GDP, 2013-2085."

      You're absolutely right that the national debt is increasing.  But the CBO projections going forward use a higher growth rate for health care costs than the U.S. has experienced is recent years.  But if the current trends continued, federal health care spending (and Medicare in particular, as shown in the chart) will constitute a much smaller percentage of GDP than it is currently projected.

      So, while the entire national debt certainly would not disappear, trillions of dollars of it might.  Which means policymakers wanted to slash Medicare to "fix the debt" now could be making an historic and unnecessary mistake.

      •  No. Trillions of dollars will not disappear. (4+ / 0-)
        Recommended by:
        nextstep, Mister T, Denver11, hmi

        Less money will be spent on Medicare.
        Depending on the actions of employers, that may or may not be made up on ACA subsidies.

        Whether or not it is, the debt is growing and, according to the report you linked, will grow at an increasing rate after a short-term slowdown.

        As to slowdowns in medical spending, here is the CBO outlook:

        The growth of health care spending cannot exceed economic growth indefinitely, because if it did, total spending on health care would eventually account for all of the
        country’s economic output—an impossible outcome.
        [...]
        Thus, even in the absence of changes in federal law,
        growth in per capita spending on Medicaid and on health
        care financed through the private sector will gradually
        slow. The rate of growth of Medicare spending per beneficiary is also likely to slow, though to a lesser extent, even without changes in federal law—reflecting changes in
        medical practices common to all patients ...
        In other words, growth in medical costs will slow down because we simply won't be able to pay higher prices any more.  Frankly, I'm amazed that fewer people make the link between the incredibly high prices we pay now and the sluggish economy.

        LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

        by dinotrac on Sun Nov 24, 2013 at 02:12:46 PM PST

        [ Parent ]

        •  It's Worth Checking Out the CEA Report... (3+ / 0-)
          Recommended by:
          1BQ, TXdem, deepeco

          ...summarized here.

          For starters, Uncle Sam is already savings tens of billions of dollars just compared to projections from 2010:

          The recent slow growth in health care spending has substantially improved the long-term Federal budget outlook: The Congressional Budget Office has reduced its projections of future Medicare and Medicaid spending in 2020 by $147 billion (0.6 percent of GDP) since August 2010.  This represents about a 10 percent reduction in projected spending on these programs.
          And the benefits, if these lower-than-expected growth rates continue, are potentially substantial:
          In the short run, slower growth in health spending is a positive for employment: The slow growth in health care costs has reduced employers’ benefit costs, increasing firms’ incentives to hire additional workers.  Available estimates suggest that these gains could be substantial, although their magnitude is uncertain.

          Over the long run, slower growth in health spending translates directly into higher wages and living standards: If just half the recent slowdown in spending can be sustained, health care spending a decade from now will be lower by $1,400 per person, a benefit that workers will realize in the form of higher wages and that federal and state governments will realize in the form of lower costs.

          •  "Saving from projections" - also known as -- (0+ / 0-)

            the projections were wrong.

            LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

            by dinotrac on Sun Nov 24, 2013 at 07:48:51 PM PST

            [ Parent ]

          •  More likely a benefit that employers will realize (0+ / 0-)

            in reduced spending on personnel costs. There's no incentive for them to use it to increase wages.

            "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

            by Alice in Florida on Sun Nov 24, 2013 at 08:40:56 PM PST

            [ Parent ]

          •  Health Care Costs Declining (0+ / 0-)

            Anyone that believes that any savings in health care costs, on the part of employers, will be passed on to employees, via higher wages and benefit packages -- those people must still believe in the tooth fairy.  Like everything else, any extra money will go right into the pockets of the corporations.  The 1% will do great, while the rest of us will still suck on the hind t*t.

        •  the CBO does (0+ / 0-)

          CBO does not say cost will go down because we simply won't be able to pay.  

      •  That's a lot of "ifs" (1+ / 0-)
        Recommended by:
        hmi

        A more accurate HL would be "If a lot of things turn out differently than the CBO says the debt might go down".  

    •  You're not missing anything. (2+ / 0-)
      Recommended by:
      nextstep, hmi

      From the report summary:

      The high and rising amounts of federal debt held by the
      public that CBO projects for coming decades under the
      extended baseline would have significant negative consequences for both the economy and the federal budget.
      Those consequences include reducing the total amounts
      of national saving and income; increasing the government’s interest payments, thereby putting more pressure
      on the rest of the budget; limiting lawmakers’ flexibility
      to respond to unexpected events; and increasing the
      likelihood of a fiscal crisis

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Sun Nov 24, 2013 at 02:00:40 PM PST

      [ Parent ]

      •  CBO still assumes health spending returns (1+ / 0-)
        Recommended by:
        ybruti

        much closer to its historically high growth rates than the average over the last 4 or 5 years.

        They've been nudging their long-term forecasts down slightly.  Bu they still assume much faster health cost inflation in the future.

        They did a report this last August that examined why their baselines for health costs have been so overestimated in recent years.  At best they could explain only one-third of the overestimate via new information (better info on demographic trends, the impact of the recession etc.)

        http://www.cbo.gov/...

        Therefore they don't understand 2/3rds of why their forecasts have been too high, which is why many health economists -- though certainly not all, and perhaps not the majority -- think that structural changes may in fact be the explanation.

      •  Lol, there is so much wrong with that CBO line (1+ / 0-)
        Recommended by:
        Odysseus

        I can not believe you even quoted it.

        "The high and rising amounts of federal debt held by the
        public that CBO projects for coming decades under the
        extended baseline would have significant negative consequences for both the economy and the federal budget."

        Should read: "the high and rising amounts of Net Financial Assets held by the private and foreign sectors....."

        "Those consequences include reducing the total amounts
        of national saving and income;...."

        T-bonds are the savings of the Non-Govt, Govt spending = Non-Govt income or in other words, the Govt's deficit = the Non-Govt surplus

        " increasing the government’s interest payments,....."
        The Fed controls the interest rate, its not determined by the markets.  Long term rates are nothing but expectations of the short term rate plus inflation expectations.  If the Treasury wanted to issue nothing but 3-month T-bonds at .25% forever, of course they could do this, its their monetary system.  Congress passed all the laws that created our system this way. So if you want to say that interest rates are going to rise, you need to explain why the Fed is going to raise them.

        "thereby putting more pressure
        on the rest of the budget; limiting lawmakers’ flexibility
        to respond to unexpected events; and increasing the
        likelihood of a fiscal crisis."

        There is no such thing as the Govt ever running out of fiat money.  There is no way to arbitrarily crowd public investments in anything if We The People choose to let important investments be shrunk by special interests.  There is no magic % of GDP that Govt spending must stay under.  If Govt spending must increase to 30% of GDP to pay for our aging population then of course there is nothing stopping us from doing that.

        MMT = Reality

        "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

        by Auburn Parks on Sun Nov 24, 2013 at 02:34:37 PM PST

        [ Parent ]

      •  Projections (0+ / 0-)

        IMO, the key to it all is to put all 3 branches back in dem hands.  Then raise the tax levels, for 10 years, back to the days of the Eisenhower Administration.  Let's get the economy cooking again.  Jobs, jobs, jobs.

        In the long run, Keynes is right on.  We need to deficit spend right now -- and big time.  Let's jump start our economy.

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