President Obama has always focused on a $4 trillion reduction in the US Debt. This is what many economists and other financial experts have told him was necessary.
Thus, the Obama Administration has been working off of the Aug 12, 2012 CBO projection on the Government Outlay side in deriving this $4 trillion US Debt Reduction.
The Republicans have been pushing hard for additional Medicare and Medicaid cuts by focusing on cuts in benefits. The Obama Administration has too but by properly focusing primarily on cost savings in health care delivery.
So what's changed on the Medicaid and Medicare Cost fronts since this Aug 12, 2012 CBO report was issued, which was used for determining a fair amount of additional Medicaid and Medicare Cost reductions to reach this $4 trillion Grand Bargain?
Well, a lot.
The CBO issued a new projection of Medicaid and Medicare Costs for the next 10 years (2013-2022) on Feb 13, 2013. Included in this report is an explanation of the Technical Changes in making its Medicaid and Medicare Cost projections from its Aug 12, 2012 report to its Feb 13, 2013 report.
Believe it or not, the CBO revised down its cost projections for the next ten years for Medicaid by $236 bil and for Medicare by another $137 bil, for a total cost projection reduction of $373 bil.
And the really interesting thing about these estimated cost reductions is how much they were end-loaded. In just fiscal year 2022, the cost reductions from the Aug 2012 CBO report to the Feb 2013 report was $81 bil for Medicaid and Medicare combined. And this was a 23% higher cost reduction from such cost reduction in 2021 of $66 bil.
Thus, given this $81 bil total cost reduction for Medicaid and Medicare for just 2022, coupled with its very high annual growth rate in cost reductions, any reasonable CBO projection of Total Medicaid and Medicare Cost Reductions for the second 10 years (2023-2032) has to be substantially more than $1 trillion.
My gosh, so the Republicans are trying to reduce Medicaid and Medicare benefits for the middle class and lower class, and out of the blue, there has magically been CBO Technical Changes to Medicaid and Medicare Costs which have reduced them by $373 bil over the next 10 years, and by more than $1 trillion over the second 10 year period.
Give me a break! There is no way this is fair.
So, why the massive cost reductions in CBO Medicaid and Medicare Costs from Aug 2012 to now?
It's all about the actual Medicaid and Medicare Costs being substantially lower than what was projected by the CBO in Aug 2012. Or, another way to explain it is that Medicaid and Medicare Costs aren't as much of a problem as they were only six months earlier.
Let me quote below here this Feb 2013 CBO Report on the reasons for the Technical Changes that it made which reduced its Medicaid and Medicare Cost projections.
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"Technical Changes
Medicaid
and Medicare.
In
recent years, health care spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated. (For example, in 2012, federal spending for Medicare and Medicaid was about 5 percent below the amount that CBO had projected in March 2010.)
In response to that slowdown, over the past several years, CBO has made a series of downward technical adjustments to its projections of spending for Medicaid and Medicare. From the March 2010 baseline to the current baseline, such technical revisions have lowered estimates of federal spending for the two programs in 2020 by about $200 billion—by $126 billion for Medicare and by $78 billion for Medicaid, or by roughly 15 percent for each program.
For the 2013–2022 period, technical changes to estimates for the Medicaid program have reduced projections for spending by $236 billion (or 5.5 percent) relative to CBO’s estimates in August 2012. (Changes to estimates of Medicaid outlays related to legislation or economic factors amounted only to $3 billion.)
The revisions reflect both lower anticipated enrollment in Medicaid and lower expected costs per person. CBO now estimates that enrollment in 2022, for example, will be about 84 million, compared with the 85 million it projected last August.
Although CBO projects that more people will enroll in Medicaid for the first time because of the Affordable Care Act’s expansion of the program, the agency’s projection of the number of people who would have been covered by Medicaid in the absence of that act has declined by a greater amount. Lower estimated Medicaid enrollment among those other groups is, in part, the result of improvements in CBO’s methods for forecasting the number of people with insurance. More people are now expected to have insurance through other sources (primarily employers), resulting in lower projected enrollment in Medicaid. In addition, fewer people are now expected to enroll in the Supplemental Security Income program, and because people who are enrolled in that program automatically qualify for Medicaid, that change in turn reduces the projected number of Medicaid enrollees.
CBO’s current baseline also shows lower spending per person in the Medicaid program than was shown in August, primarily because of adjustments to account for the slowed growth in Medicaid spending. The agency also anticipates that per-person costs will be lower than it anticipated in August because a larger share of the people who will be covered under the Medicaid program will be children and healthier adults, whose medical costs tend to be lower than those of less healthy adults. Because of those and other factors, CBO now estimates that Medicaid’s spending per person in 2020 will be about 6 percent lower than it projected in August.
For Medicare, CBO has reduced its 10-year projections of outlays for Medicare by $137 billion (or 2 percent) for technical reasons, mostly because of updated data on actual spending for 2012, the third consecutive year in which spending was significantly lower than CBO had projected. In past baselines, CBO had begun to reflect the slowing growth in spending for Medicare’s Part A (Hospital Insurance) and Part B (Medical Insurance); the largest downward revision in the current baseline is for spending for Medicare’s Part D
(prescription drugs)."
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In all fairness, any way you want to look at it, these very recent $373 bil of Medicaid and Medicare total cost reductions over the next ten years have to be included as a component part of getting to the $4 trillion Grand Bargain.
