Will Obama's Bold Vision End the Myth of Entitlement Reform?

As President Obama begins his second term, he does so with an expansive vision for America.

“America's possibilities are limitless,” he said in his inaugural address, “for we possess all the qualities that this world without boundaries demands:  youth and drive; diversity and openness; an endless capacity for risk and a gift for reinvention.   My fellow Americans, we are made for this moment, and we will seize it - so long as we seize it together.”

There are many potential roadblocks toward achieving that bold vision.  One is the myth that entitlement reform must be a part of it.

The reason that entitlement reform is at the top of some political agendas has nothing to do with the growth in entitlement programs today.

Some people with these agendas don’t like any government-run programs and won’t listen to the facts about them. 

Those who do look at the facts see the rapid growth in Medicare and Medicaid spending through 2009.  According to the Center for Medicare and Medicaid services, Medicare spending increased by an average of 10.9 percent per year between 1967 and 2009, and Medicaid spending by an average of 10.7 percent per year between 1975 and 2008.

They believe that this rate of growth is not sustainable.  But since the beginning of President Obama’s first term, we haven’t sustained a growth rate even close to this.

A report from last September and two more reports released in the last couple of weeks – one from the Department of Health and Human Services (HHS) and another from the Bureau of Labor Statistics (BLS) – show just how far the myth is from today’s reality.

The new HHS report found that per capita Medicare spending increased by just four-tenths of one percent in 2012, following increases of only 3.6 percent in 2011 and 1.8 percent in 2010.

And according to some new BLS data, the overall medical inflation rate last year – which should tell us something about Medicare and Medicaid growth in the coming year – was 3.2 percent. 

There is a much more immediate health spending problem about which policymakers should be worried – one that entitlement reform could make worse. 

High health costs may burden state and local governments.  But they burden people who rely on Medicare and Medicaid far more.

In an article entitled the High Cost of Out-of-Pocket Expenses published in September by the New York Times, Judith Graham summarized from a third recent study.  The study found that during the last five years of life:

• People on Medicare spend $38,688 on medical costs.
• People with Alzheimer’s spend $66,155. 
• The top quarter of spenders spend a whopping $101,791.

Some policymakers love talking about the unfairness of the “death tax.”  How about the unfairness of this hidden “pre-death tax” that gets bigger every time elected leaders cut entitlement spending? 

Entitlements are not the problem.  The cost of health care is.  Entitlements are – and always have been – the solution to the problem of a middle class forced into poverty by high health care costs near the end of life. 

And while entitlement reform may reduce government expenditures, it will only do so at the expense of those who need Medicare and Medicaid the most.

President Obama said it well in his address. 

“We must make the hard choices to reduce the cost of health care and the size of our deficit.  But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.  For we remember the lessons of our past, when twilight years were spent in poverty, and parents of a child with a disability had nowhere to turn.  We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few.  We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other - through Medicare, and Medicaid, and Social Security - these things do not sap our initiative; they strengthen us.  They do not make us a nation of takers; they free us to take the risks that make this country great.”

Contact Paul Gionfriddo at gionfriddopaul@gmail.com. Twitter: @pgionfriddo.  LinkedIn: www.linkedin/in/paulgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.

Denying the Inevitable

If 243 members of Congress knew that they were going to develop Alzheimer’s Disease or related dementia, would it change the way they make Medicaid and long term care policy?

Or would they continue to deny the inevitable?

When Congress convened in 2011, the average age of a House member was 57, and the average age of a senator was 62.   They were approaching the prime years for dementia.

If you don’t already have Alzheimer’s Disease or related dementia by the time you turn 65, then your chances of developing it between the ages of 65 and 74 are greater than one in 20.  Your chances of developing it between the ages of 75 and 84 are almost one in 7.  And after that your chances of developing it are one in 4.

At today’s prevalence rates, 28 members of Congress will develop dementia between the ages of 65 and 74, 91 between the ages of 75 and 84, and 124 later on.

The only thing that will change this trajectory is if they die sooner of something else.

If I were a younger elected official today, this might get might attention, and it also might get my attention that the number of people with dementia will increase from 5.2 million today to at least 11 million during my lifetime.

Representative Aaron Schock of Illinois and Senators Mike Lee of Utah and Marco Rubio of Florida all fit this bill.  They were the youngest members of their respective chambers (at 39, Senator Lee was a week younger than Senator Rubio), and they had remaining life expectancies of at least 40 years. 

So while we might forgive 87-year old Representative Ralph Hall of Texas and Senator Frank Lautenberg of New Jersey if they feel they don’t always have the luxury of taking the long view in policy-making, we should wonder a little more about Senators Lee and Rubio and Representative Schock.

They are all likely to be around when the fruits of their recent healthcare work ripen over the coming decades. 

And they may find some of them especially bitter.  

According to the Alzheimer’s Association publication 2012 Alzheimer’s Disease Facts and Figures, the cost of caring for people with Alzheimer’s Disease and other dementias – in today’s dollars – will increase from $200 billion to $1.1 trillion per year by 2050.

These $1.1 trillion are not inflated by forty years of GDP growth or the increased costs of medicine.  They represent what dementia will cost us down the road even with no inflation simply because there are more of us and we’re living longer lives.

Dementia is an adversary worthy of battle at the highest levels of government.  But neither Senator Lee nor Senator Rubio nor Representative Schock mentions it on his website. 

Instead, Senator Lee champions what he calls “saving the American dream,” which rolls back Medicaid funding to 2007 levels and caps it there.  Senator Rubio has endorsed the same approach.  Medicaid currently pays $36 billion a year of the $200 billion cost of care for people with dementia.  Under Senator Lee’s plan, it will pay even less than that toward the $1.1 trillion cost of care in 2050.

And Representative Schock goes one step further.  He touts a bipartisan effort last year to repeal the CLASS Act, which ironically would have offered private insurance for dementia-related care to take some of the burden off Medicare and Medicaid.

Dementia hits close to home for all of us.  A member of our family has it, and it has been progressing relentlessly for several years.  This is a pretty scary thing to witness.  It’s like watching a blackboard filled with facts and figures being erased, one giant sweep at a time, until all the information fades.

Senator Lee wants to save the American dream, but does he really want to do it by substituting a national nightmare of disease with no relief?  And whose dreams is he really saving?  Not the ones of our family members with dementia, nor the ones of their caregivers who already shoulder so much of the burden, nor even the ones of the 243 members of Congress who may someday join the ranks of those with dementia. 

Senator Lee, Senator Rubio, and Representative Schock are, of course, entitled to pursue the policies they choose.  But I hope they will never say that no one could have foreseen what they chose to ignore.

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