Health Hustle: Obama's Insincere 'Savings' By Rich Lowry

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Source: http://www.nypost.com/seven/06162009/postopinion/opedcolumnists/health_hustle_174461.htm

June 16, 2009

WHERE does Newt Gingrich go to get his apology?

Back in the mid 1990s, Gingrichproposed slowing the rate of growth of Medicare and Medicaid -- and was clobbered by Democrats and the press for waging war on the elderly and the indigent. Now, almost every other day, President Obama finds another hundred billion dollars to cut out of Medicare and Medicaid.

Over the weekend, Obama announced the discovery of another $313 billion in savings over 10 years, on top of $300 billion he'd already proposed. Soon enough, he'll 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 pro- gram 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 yesterday, 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 existing health programs rather than to create a dubiously financed, new health program?

Obama's cost-savings gestures always reek of bad faith. He announced in his speech to a joint address of Congress in February that he had already identified $2 trillion in savings in the federal budget, when they were really far-off expenditures for the Iraq War that never would've taken place anyway and already-scheduled tax increases -- i.e., not new savings at all. He risibly hyped a $100 million spending cut as a meaningful reduction. He called last week for reinstituting "pay-go" rules in Congress, even though the rules exempt 40 percent of the budget.

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 only 56 cents on the dollar. Obama relies on the tried-and-true practice of cutting the payments more. This means there will be fewer doctors willing to accept 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.

In his AMA speech, Obama sold his health program as a cost-saving measure, but the items he touted are his usual litany that would produce little or nothing in the way of savings: electronic medical records, preventive medicine, etc. In a document released over the weekend, Obama even invoked the hoary Beltway chestnut of cutting "waste, fraud and abuse."

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.

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