Mitt Romney turned 65 today, and he celebrated by having his campaign staff belch out a misleading memo about Medicare (Mitt actually did not enroll in Medicare, so he now must turn to the private market with a mere $250 million in personal wealth to protect him). Romney tried to claim that President Obama’s policies, rather than the GOP’s, would end Medicare as we know it. This is the typical misreading of the policy in the Affordable Care Act of “cutting Medicare,” when it actually eliminated wasteful payments to Medicare Advantage (and by the way, Medicare Advantage has actually thrived as a result). The main question Romney asks is, “Why is President Obama ending Medicare as we know it by allowing it to go bankrupt in less than 15 years?”
But the danger for Romney – and all budget hawks with their knives out for Medicare – comes in this chart. It shows that per-capita Medicare spending is actually declining, as the program becomes better at reining in costs. If this continues with ACA reforms, you will see cost growth in Medicare dip below GDP on a per-capita basis. Because of the expected growth of the Medicare rolls as the baby boom generation retires, we’ll still see increased Medicare spending. But the slowing of spending growth would upend analyses of the draining of the Medicare coffers.
Some have presented this as a vindication for the ACA. But that statute has only been in place for barely two years, with most of its cost-cutting features still not in effect. [E.g., the GOP has refused to allow any appointments to the Independent Payment Advisory Board, intended to watch costs and recommend more cost-effective treatments for Medicare.] Anyway, this reduction is part of an historical trend. No, a more logical explanation relates to the administrative and cost-saving success of single-payer systems generally. Experiments with cost containment simply have much more ability to affect a large portion of the market in a single-payer world than in a world with a series of different interlocking payers. Medicare keeps costs down because it’s well-situated as a health care system generally to make the most of its market power.
A sustainable cost curve in Medicare paired with out of control costs in the private market would make the case extremely clear over what health care system Americans should move toward. That would be problematic for both Romney and Obama, along with practically every other national politician. The implication would be that a single payer system simply works better for health care.