The Impact of the Partnership Long-Term Care Insurance Program on Private Coverage and Medicaid Expenditures by Haizhen Lin, Jeffrey Prince :: SSRN

We examine the impact of U.S. states’ adoption of the partnership long-term care (LTC) insurance program on households’ purchases of private coverage. This program increases benefits of privately insuring via a higher asset threshold for Medicaid eligibility for LTC coverage, and targets middle-class households. We find the program generates few new purchases of LTC insurance, and those it generates are almost entirely by wealthy individuals, as predicted by Medicaid crowd-out. Further analysis suggests that awareness levels of the program, along with bequest intentions, also effectively predict response rates, but Medicaid crowd-out persists. We provide an estimate of expected Medicaid savings/costs.

via The Impact of the Partnership Long-Term Care Insurance Program on Private Coverage and Medicaid Expenditures by Haizhen Lin, Jeffrey Prince :: SSRN.

The Politics of Loss > Publications > National Affairs

Even assuming 3% growth and an unemployment rate of roughly 5% for the next 50 years, CBO still projects that total federal spending will rise to 34% of GDP, entirely because of spending on health-care entitlements — Medicare, Medicaid, the Children’s Health Insurance Program, and Obamacare. This level of federal spending is, quite simply, unsustainable; it will require either massive tax increases or massive reductions in entitlement outlays. In other words, it will destroy the great American share-out once and for all.

via The Politics of Loss > Publications > National Affairs.

Health Care Reform Isn’t Entitlement Reform – Reason.com

All this assumes that the law’s Medicare savings will actually pay off. Yet that is no sure thing either. Those projected savings are based in large part on targeted payment cuts to health industry players and providers. Those cuts, however, are already facing heavy opposition, and the White House has already backed down at least once.

On the same day that the Medicare Trustees report was released, the Government Accountability Office published a critical report on the administration’s decision to override planned payment cuts to private insurers in the Medicare Advantage program—cuts that played a big part in generating ObamaCare’s alleged Medicare savings. A week earlier, progressive champion and Massachusetts Senate hopeful Elizabeth backed scrapping ObamaCare’s tax on medical device makers. In this sort of political environment, it is hard to see how all of ObamaCare’s savings will stick.

via Health Care Reform Isn’t Entitlement Reform – Reason.com.

Finally, a way in which Obamacare actually saves money « The Enterprise Blog

I assume one thing that would result in an unexpected boost to longevity would be greater innovation in the medical industry. But will more federal government — via Obamacare — involvement in the U.S. healthcare system result in more innovation? History would suggest otherwise. So with less innovation, the less likely there will be an surprise longevity boosts. It’s a feature, not a bug. And according to the IMF, avoiding that scenario would save trillions.

via Finally, a way in which Obamacare actually saves money « The Enterprise Blog.

RealClearPolitics – The Origins of Entitlement

When Roosevelt proposed Social Security in 1935, he envisioned a contributory pension plan. Workers payroll taxes “contributions” would be saved and used to pay their retirement benefits. Initially, before workers had time to pay into the system, there would be temporary subsidies. But Roosevelt rejected Social Security as a “pay-as-you-go” system that channeled the taxes of todays workers to pay todays retirees. That, he believed, would saddle future generations with huge debts — or higher taxes — as the number of retirees expanded.

via RealClearPolitics – The Origins of Entitlement.

The Fiscal Consequences of the Affordable Care Act | Mercatus

The Patient Protection and Affordable Care Act (ACA) signed into law by President Obama in 2010 will significantly worsen the federal government’s fiscal position relative to previous law. Supporters argued that this comprehensive health care reform would deliver a much-needed correction to the government’s unsustainable fiscal outlook and would benefit the country’s overall fiscal situation. However, between now and 2021, the ACA is expected to add as much as $530 billion to federal deficits while increasing spending by more than $1.15 trillion. Despite the fondest hopes from its supporters, the passage of the ACA unambiguously darkens a dim fiscal picture.

The federal government promised the health care law would finance two different activities-increasing Medicare solvency and extending health care coverage, but with only enough savings to pay for one. Thus, the ACA’s total new spending well exceeds its cost-savings provisions. In 2014, the benefits will kick in and as history shows, it is nearly impossible to take benefits away after they are given. To ensure the ACA does not worsen the federal fiscal outlook, fully two-thirds of the ACA’s new health-exchange subsidies must be repealed, or financing offsets must be found before 2014.

via The Fiscal Consequences of the Affordable Care Act | Mercatus.

Study on healthcare law, deficit puts Obama administration on the defensive – The Hills Healthwatch

The Obama administration is playing defense after a Republican Medicare trustee released a report that says the presidents healthcare law will add $340 billion to the deficit. In a White House blog post late Monday night, the presidents deputy assistant for health policy derided the report as “another brand of new math ” and highlighted the political ties of its author, Charles Blahous, who was a champion of privatizing Social Security during the George W. Bush administration.

via Study on healthcare law, deficit puts Obama administration on the defensive – The Hills Healthwatch.

CBO | Revenues and Spending Under CBO’s Extended Baseline Scenario and Two Alternatives Specified by Chairman Ryan

Congressman Paul Ryan asked CBO to examine two other approaches: an across-the-board increase in income tax rates and an across-the-board reduction in spending other than that for health care entitlement programs. The former approach would require revenue increases even greater than those in CBO’s current-law baseline, and the latter would require very sharp cuts in other federal programs.

via CBO | Revenues and Spending Under CBO’s Extended Baseline Scenario and Two Alternatives Specified by Chairman Ryan.

The Effects of Irregular Real Wage Growth and Varying Rates of Price Inflation on Social Security Lifetime Wealth Transfers Across Birth Cohorts by Randall Mariger :: SSRN

The paper estimates the effect of irregular real wage growth and varying rates of price inflation on the net value of the Social Security retirement program (Old Age and Survivors Insurance, or OASI) for the 33 birth cohorts born between 1917 and 1949. The net value of Social Security employed is the “lifetime net benefit rate”, which is the expected present value of lifetime benefits less the expected present value of lifetime taxes expressed as a percent of the expected present value of lifetime earnings. In order to isolate the effect of real wage growth and price inflation on the lifetime net benefit rate (LNBR), OASI taxes and retirement benefits are simulated for a representative person who pays a 10.6 percent OASI tax rate at all ages and has a normal retirement age and mortality probabilities projected for the 1949 birth cohort, but who experiences real earnings levels and rates of price inflation that are cohort-specific.

The paper finds that irregular real wage growth and irregular rates of price inflation cause the LNBR for the 33 birth cohorts to vary between -4.31 percent and -3.27 percent. Variation caused by irregular real wage growth is 40 percent larger than total variation, and variation caused by price inflation is about equal to total variation, which is possible because the correlation between the two components is -0.7. The implication is that if the joint distribution of price inflation and real wage growth in the future is like that in the recent past, then somehow eliminating only the irregular real wage growth component would not be helpful, and somehow eliminating only the price inflation component would be counterproductive. Reducing the sensitivity of the LNBR to the macro economy would require reducing both sources of variation in this case.

The effect variation in real wage growth has on the LNBR would have insurance value if cohorts whose lifetime earnings are low relative to trend tend to have higher LNBRs, and cohorts whose lifetime earnings are high relative to trend tend to have low LNBRs. The paper rejects this possibility. No correlation is found between the effect of real wage growth variation on LNBRs and its effect on the present values of lifetime earnings.

Because wage indexing in the current Social Security benefit formula appears to have no insurance value, an alternative benefit formula based on a notional account balance is explored. This alternative formula has the virtue that the LNBR does not vary with real wage growth while benefits are as generous and progressive as under the current benefit formula.

The paper also considers reforms to reduce the sensitivity of real benefits to price inflation when real wage growth is held constant. Surprisingly, straightforward reforms to correct the anomalies in the calculation of initial benefits do not significantly reduce the estimated variability of real benefit levels across birth cohorts when real wage growth is held constant. It is demonstrated that this finding is due to the fact that the COLA depends on lagged price changes. Given that the COLA must be based on lagged price changes, it is concluded that improving the COLA would require making annual payments making up for inaccuracies in the COLA.

via The Effects of Irregular Real Wage Growth and Varying Rates of Price Inflation on Social Security Lifetime Wealth Transfers Across Birth Cohorts by Randall Mariger :: SSRN.

Romney may be a weak candidate, but Obama is a weak incumbent – The Washington Post

A candidate not known for boldness has embraced Ryan’s bold approach to reforming Medicare and Medicaid. Now comes the assault. It is a perilous moment for the candidate and the Republican Party. If Romney is incapable of making the case on entitlements — or loses his nerve and tries to change the subject — it would be a devastating political setback. It would also, incidentally, be a devastating setback for the country, which is being hastened toward crisis by entitlement demagogues.

via Romney may be a weak candidate, but Obama is a weak incumbent – The Washington Post.