Boehner Trades $200B in New Spending Now for Nothing Later

House Speaker Boehner Addresses Media After Weekly Conference Meeting

Most people (including me) who are even vaguely familiar with Medicare’s reimbursement rates for doctors agree that the current reimbursement scheme is already an atrocity, and that it will get much worse if planned scheduled cuts that are over the horizon are allowed to kick in. Further cuts to the Medicare reimbursement schedule would in fact likely affect quality of care for many Medicare beneficiaries. So I agree with Boehner that something should be done to fix the scheduled upcoming cuts.

The problem is that fixing these cuts will cost money – quite a lot of it, in fact. Nearly $200 billion, all told. The secondary problem is that [mc_name name=’Rep. John Boehner (R-OH)’ chamber=’house’ mcid=’B000589′ ] is one of the worst negotiators in recent history. Strike that – Boehner is pretty decent getting Democrats on his side by giving them what he wants. He’s not so great at maintaining cohesion on his side and actually getting something in return. Thus, Boehner is negotiating a deal – again, with Democrats, which will essentially give away the house for free in exchange for promised future entitlement reforms. Stop me if this sounds familiar.

Speaker [mc_name name=’Rep. John Boehner (R-OH)’ chamber=’house’ mcid=’B000589′ ] is seeking to jump-start his legislative agenda with a bipartisan gamble: a $200 billion Medicare deal that’s already dividing conservatives in his rowdy conference.

The Ohio Republican sees the deal as a steppingstone to what could be a broader overhaul of the costly entitlement system. Tax and entitlement reform are two of Boehner’s biggest priorities, but they’ve languished since he took power in 2011.

By the end of this week, the House committees responsible for healthcare issues could roll out a plan to halt recurring cuts to Medicare doctors. And the legislation could hit the floor by next week, just days before the latest round of cuts is slated to take effect.

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And in the past few weeks, both Boehner and Pelosi have spoken several times as they’ve closed in on a deal to end the automatic cuts to Medicare reimbursements for physicians, as well as extend a popular children’s health program known as CHIP.

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The package would be paid for through a combination of means testing — that is, making wealthier seniors pay more for Medicare — and reforms to the costly private supplemental health insurance plan known as Medigap.

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The Medicare cuts only impact wealthy seniors, so most House Democrats are expected to back the plan. The question is whether enough conservatives will get on board to give political cover to Boehner’s leadership team, which has repeatedly struggled this year to pass any controversial bills through the chamber.

While the reforms will be phased in and won’t fully be paid for in the first decade, Boehner will make the case to conservative critics that the deal will yield greater out-year savings after 10 years.

See what’s happening here? Boehner not only concedes the full doc fix but also gives Pelosi the CHIP extension that Democrats have been screaming for for years. What does he get in return? Paltry means testing that will not even be fully phased in for the first decade. A couple points deserve to be made about this scheme that Boehner has cooked up to get Democrat votes. First, the likelihood that the doc fix will exceed its currently estimated cost in present value dollars is nearly 100% if recent experience with Congressional cost estimates is any indication. Second, the likelihood that the means-testing proposed will realize $200 billion worth of present value dollar savings is nearly zero, even if we suppose that Democrats will not undo it (by executive fiat) before the fix is over.

But even more importantly, this means testing does nothing to address the structural problem inherent in both Medicare and Social Security. When these programs were passed in 1965, average life expectancy in the United States was 67 for males and 74 for females. It is currently 76 for males and 81 for females. What is worse (at least from a fiscal perspective – it’s great from a familial perspective) is that people who reach the age of 65 are living much, much longer than ever before, with most estimates now showing that if you reach the age of 65 you are likely to live another 19.5 years.

You don’t have to be a statistical genius to tell that in the long term this is not a sustainable program as it is currently constituted. Any “entitlement reform” to Medicare or Social Security that is worthy of the name will have to acknowledge the fact that people are living much longer than the programs initially contemplated whereas for political reasons politicians have refused to touch the initial eligibility age. This basic and ongoing failure of political will is creating an ever-widening gap in the long term fiscal sustainability of these programs that can only be plugged with massive tax increases or massive deficit spending.

But as long as Boehner, et al have the reins, we will instead get these papered-over fake compromises in which Democrats get everything they want and we get promises for reform that are a) meaningless and b) will never occur anyway.

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