Monday, November 15, 2010

DIY Budget Fix

The New York Times recently featured an interactive chart where readers could tackle the federal budget. Various parts of the cheddarsphere gave it a go (Zach, Cindy) so I did too. (H/T Letters in Bottles.)

Maybe it's the 18 hours of darkness that seem to have suddenly been thrust upon us recently that has me in a more skeptical mood than usual, but I'm not very impressed by these sorts of exercises.

Perhaps at some margin it makes citizens more informed, but an interactive graphic, even a really cool one, is a long, long way from any real effort at tackling our nation's taxing and spending policies.

Case in point is capping the growth of Medicare spending to GDP growth plus 1%. This is the biggest single line item in the exercise and it sounds great, but it's not realistic. We already have laws restricting the growth of Medicare spending and Congress regularly votes to not comply with those laws. This is the "doc fix", a series of temporary laws that are now a permanent part of the legislative calendar.

And why do we have the doc fix? So doctors will continue to take Medicare patients and we don't have seniors lined up at the Capitol demanding to know why Congress won't pay rates that doctor's are willing to accept.

Inflation in the market for healthcare will ultimately determined by supply and demand notwithstanding a government edict demanding prices not grow quicker than GDP + 1%. Now if Congress stopped paying for as many procedures and visits, we might see some costs come down with lower demand. Does anyone think restricting access to care on a large scale is politically feasible?

Saying we are going to limit the growth of spending may sound great, but it's really just more of the free-lunch disease that grips so many of us when it comes to making the hard choices concerning government spending.

1 comment:

J. Strupp said...

The broader question, of course, is why we're spending all of this time trying to bring down the deficit in the first place. These exercises take our eye off the problem at hand.

How 'bout we Americans start focusing on the crisis that is the 15 million plus Americans partially or totally unemployed?