Saturday, January 03, 2009

Outgoing HHS Secretary Leavitt's grim forecast for Medicare, Medicaid

The Heritage Foundation (a conservative think tank, to be sure) publishes an interview (conducted by Grace Marie-Turner) and lecture with Michael Leavitt, outgoing Health and Human Services Secretary under President Bush, dated April 29, 2008, published June 11, 2008 (Heritage Lecture #1088), called “Medicare: Drifting Toward Disaster,” link here.

On January 1, 2009 in The Washington Post, on p A13, columnist George F. Will has an op-ed “Dr. Leavitt’s Scary Diagnosis”, link here. Leavitt now says that the Medicare Part A trust fund could run out by 2016 instead of 2019 because of the weak economy. Will goes on to say that when Medicare was invented in 1965 (“when we decided that health care for the elderly would be paid for by people still working”), we had no concept of how quickly medical advances (like bypass surgery) could extend life, and he also adds that many people who have benefited from extravagant care did not always practice the best personal health habits, including many who smoke. We may not have correctly anticipated smaller and more dispersed extended families. Will and Leavitt do understand that previous generations looked at health habits differently because the risk of death from external sources was much greater, and they don’t mean to imply that this is a matter of personal morality or “moral hazard”.

He also discusses that the federal contributions to Medicaid are likely to explode, and we’re already seeing states cut back Medicaid eligibility and services because of finite budgets.

On filial responsibility, I’ve often noted that many states may feel the incentive to start enforcing their “poor laws.” However, the lookback period regulations in Medicaid payments that receive federal subsidies could experience a paradoxical effect: in order to get more federal funds, states might liberalize how they interpret “asset give away” and lookback regulations.

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