Medicare — despite the administration's rosy forecasts — is headed for a financial crisis, thanks largely to Obamacare, say healthcare experts John Goodman and Laurence Kotlikoff.
Goodman is president of the National Center for Policy Analysis and Kotlikoff is an economics professor at Boston University.
In a report last month, Medicare trustees "acknowledge that current law envisages dramatic reductions in future Medicare outlays which may be 'difficult to sustain,'" the two write in The Wall Street Journal.
"Yet even with these unrealistic assumptions about Medicare costs, the future looks bleak. The unfunded liability in Medicare, the trustees tell us, is $34 trillion over the next 75 years."
Goodman and Kotlikoff contend that "based on more plausible assumptions, such as those reflected in the 'alternative' scenario for Medicare produced by the Congressional Budget Office in June 2012, the long-term shortfall is more than $100 trillion."
The trustees' estimates are "based on the assumption built into law that next Jan. 1 there will be a 25 percent decrease in the fees that Medicare pays doctors," they say.
That's because Congress passed a law in 1997 forbidding Medicare physician fees from growing faster than the economy as a whole. "Since then, though, Congress has postponed the cuts on 14 occasions," the two write. "Why assume things will be different now?
As for Obamacare, "to pay for the expansion of health insurance for the young, the new health law calls for steep cuts in the growth of healthcare spending on the elderly," Goodman and Kotlikoff write.
The say "draconian" cuts in payments to providers will have to be made.
"Medicare fees would fall below the reimbursement rates for Medicaid next year and fall further and further as the years go by," they say.
"From a financial point of view, senior patients will become less desirable than welfare recipients. Medicare's Office of the Actuary is predicting that one in seven hospitals will completely leave the Medicare system by 2020 because of these pay cuts."
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