At one time I thought that Mark McClellan would be one of the very few who would manage to get out of the Bush administration with his reputation. It's looking like I was wrong. Nobody. Nobody is getting out of the Bush administration with their reputation:
washingtonpost.com: OMB Says Medicare Drug Law Could Cost Still More: According to internal White House budget office estimates of the long-term cost of Medicare, spending related to the new drug benefit could increase by $42 billion over the coming decade. The revised figure appears in a chart prepared during this summer's "mid-session review" by the Office of Management and Budget and Medicare actuaries. The document provides a detailed breakdown of an extra $176 billion in Medicare spending projected for the next 10 years. The chart, provided to The Washington Post late last week, identifies $42 billion of that increase "as related to MMA," the initials of the Medicare Modernization Act, the new prescription drug law.
Several budget analysts said the chart indicates that the price tag of the president's new drug program could total as much as $576 billion over 10 years. "Using their own numbers, it costs over 10 years $42 billion more, and so, therefore, it's $576 billion," said Richard Kogan, senior fellow at the Center on Budget and Policy Priorities. But administration officials over the weekend strongly disputed that the chart indicates that the drug program's projected cost has been increased by $42 billion. Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), said that Medicare's actuaries have not reestimated the cost of the drug law and that the new figures are primarily adjustments to the "baseline" or projected spending levels for a Medicare program likely to cost more than $4 trillion over the next decade. He said there is no way to anticipate at this point how the new prescription drug benefit will interact with other Medicare programs. He said it would be a mistake to simply add the $42 billion to $534 billion to come up with a new projected cost, noting that "related to" is not the same as "attributable."
If Mark really cannot anticipate how the new prescription drug benefit will interact with other parts of Medicare, he needs to let somebody who can make an estimate have his job as soon as possible. If there is indeed "no way to anticipate at this point how the new prescription drug benefit will interact with other Medicare programs," then there is no way to produce an estimate of the overall cost of the entire Medicare program
Posted by DeLong at September 21, 2004 08:00 AM | TrackBack
Pardon my indignation, but why did anyone take McClellan seriously in the first place? It is (to me) ridiculous that just because the Bush administration hired an economist from a good academic background and some kind of publishing record, that this would automatically mean this person would be a star of the administration. The Clinton administration was full of academics better than McClellan. All you had to do was look who he brought into the FDA to see that he was a tool.
Why is there a willingness to keep giving him the benefit of the doubt?
Essentially the Medicare drug benefit as currently planned is a significant danger to the program. There is no plan for mass drug purchases by Medicare as a means of controlling the prices of drugs, so there is every reason prices will rapidly rise and the Medicare trust will be even more quickly pressed than anticipated. A drug benefit was needed, but this benefit is really a gift of gifts to the drug industry.
Posted by: anne at September 21, 2004 08:56 AMDoesn't contemplating the works of the Elder Gods drive one mad? The W. administration is enough to make one believe in devils1
Posted by: Randolph Fritz at September 21, 2004 09:01 AMIt used to be that your reputation was the most valuable thing you owned--and a bad reputation was the death toll for anyone in the public eye. These people don't seem much worried about losing theirs...Maybe the fat fees they'll get from the conservative speaking circuit and the corporate boards they'll sit on makes up for it.
Posted by: Emma at September 21, 2004 09:02 AMhttp://www.nytimes.com/2004/09/17/opinion/17fri1.html
Those Soaring Medicare Premiums
The inescapable truth is that costs throughout the health care system, not just in Medicare, continue to escalate. Someone - generally the patients or the taxpayers - must pay the bills. The question raised by the Medicare premium debate is whether too much of the burden is now falling on beneficiaries.
There is no doubt that the higher premiums will be onerous for elderly Americans whose income is just a bit too high to qualify for various subsidies. The Medicare Part B premium, which covers doctors' services and outpatient costs, will jump by 17.4 percent next year, to $78.20 from $66.60 a month. That increase of $11.60 a month will take a big bite out of the annual cost-of-living increase added to Social Security checks, thus eroding beneficiaries' ability to meet rising costs in other areas.
In the current year, for example, retirees with a monthly benefit of $1,000, about the average for retired men, saw nearly 40 percent of their cost-of-living increase eaten up by a Medicare premium increase, while more than a million Americans had their entire Social Security increase wiped out by the higher premiums....
By law, beneficiaries are required to pay 25 percent of the costs of the Medicare Part B program, while general tax revenues pay for the other 75 percent. The biggest factor driving up the costs of the medical care outside hospitals is an increase in payments to doctors. Like most things about Medicare, the doctors' fees are based on a formula, which actually dictated that fees be cut 4.5 percent. But Congress yielded to the pleas of medical lobbyists and granted a 1.5 percent increase instead. Critics may see this as caving in to special interests, but the rise will not allow the doctors to keep up with inflation.
The next biggest factor in the premium increase is the need, seemingly indisputable, for money to beef up a reserve fund so it is actuarially sound. About $1.75 of the monthly increase will subsidize managed care plans that participate in Medicare. That, too, was a bow to lobbyists from the H.M.O.'s, though Senator Kerry supported a small portion of it as a way to protect prescription drug benefits during the transition to the new Medicare drug program.
Medicare costs are obviously an important issue - but the proper focus of criticism isn't a premium increase that in the main looks justifiable, given the current ground rules. The real question is whether the Medicare burden is being shared equitably.
The current framework was set in the Balanced Budget Act of 1997, which saved the government money by limiting Medicare payments to hospitals, doctors and health plans and by pushing more of the burden onto beneficiaries. That act was widely praised at the time as a model of fiscal discipline. But in subsequent years, the providers of health services - like hospitals, doctors and health plans - have all convinced Congress that they were dealt too severe an economic blow and have won relief from the pain. No such relief was provided to the beneficiaries of Medicare.
Medicare's problems will not be solved until the underlying problem of the rapid rise in health care costs is solved....
Posted by: anne at September 21, 2004 09:07 AMBrad's heading is a bit of an overstatement. There's always Tim Muris, who is safely out, with an enhanced reputation.
Posted by: Joe S. at September 21, 2004 10:38 AM"It used to be that your reputation was the most valuable thing you owned"
before we discovered the antihero I guess.
"If Mark really cannot anticipate how the new prescription drug benefit will interact with other parts of Medicare"
In theory any enhanced access to pharmaceuticals should cause a decrease in utilization at the medical end. However, as anne has pointed out "this benefit is really a gift of gifts to the drug industry". Actual cost of drugs at retail has changed little, if any. There will be no enhanced access. People will still be choosing between filling prescriptions and filling their bellies.
Posted by: JackNYC at September 21, 2004 11:13 AM
The worst part of the MMA has yet to be realized in entirety. Major medical facilities were giving Medicare and Medicade recipients a major discount twenty years ago until the MMA. The MMA allows for elimination of this discount--which was generally 40-50%. Does Anyone contemplate paying double the Medicare bill over the ten years? lgl
Posted by: lgl at September 21, 2004 11:24 AMMcClellan got his job the old-fashioned Republican way: he is a well-connected insider from a distinguished Texas political family (although his and Scott's father did recently publish a book accusing LBJ of orchestrating the Kennedy assassination). Mark and Scott's mom, Carol, will probably be the next governor of Texas.
Posted by: dave at September 21, 2004 12:09 PMhttp://www.nytimes.com/2004/09/14/health/policy/14conv.html?position=&pagewanted=print&position=
A Doctor Puts the Drug Industry Under a Microscope: Marcia Angell
By CLAUDIA DREIFUS
Q. The first phase - the discount card phase - of the new Medicare drug benefit is about to go into effect. Do you, as a newly minted senior, believe it will make prescription drugs more affordable?
A. It's not going to have a major effect. These discounts are very small, maybe 10 to 15 percent. At the rate of inflation of drug prices, they'll be overtaken in a very short time.
Now, the main Medicare drug benefit that goes into effect in 2006 is designed to funnel billions of dollars to the pharmaceutical industry. It's an absolute bonanza for it. The pharmaceutical industry's lobbyists made certain that the legislation contained a provision barring Medicare from negotiating drug prices.
Interestingly, the federal government negotiates drug prices for the Veterans Affairs system and gets very low prices because it is a bulk purchaser. And Medicare would have been the biggest bulk purchaser of all - so it could have negotiated very low prices. That provision allows the drug companies to continue raising their prices faster than the inflation rate, and the drug benefit will soon become unaffordable.
http://www.nytimes.com/2004/09/15/politics/15medicare.html?pagewanted=print&position=
Bush Administration Opposes Move to Delay Medicare Premium Increase
By ROBERT PEAR
WASHINGTON - The Bush administration came out Tuesday in opposition to Democratic proposals to hold down the scheduled 17 percent increase in Medicare premiums next year, saying that a one-year freeze would lead to much higher premiums in 2006.
Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said the premiums would rise 20 percent in 2006 if Congress blocked the increase planned for next year. Under current law, the monthly premium is scheduled to be $78.20 next year, up $11.60 from the premium this year. In most cases, the amount is deducted from Social Security checks.
Democrats and a few Republicans have expressed concern about the increase planned for 2005. Dr. McClellan said it reflected higher projected Medicare spending, attributable in part to an increase in payments to doctors and improvements in benefits.
The elderly "will be getting more benefits than ever,'' he said.
Medicare premiums are deducated from Social Security checks. With Medicare premiums increasing much faster than Social Security income, these deductions will reduce such income ever more meaningfully.
Posted by: anne at September 21, 2004 12:54 PMLet me say one thing in defense of Mark McClellan, whom I know and respect as both an individual and economist.
He is no political hack. If you don't believe me, ask the people in the Treasury Department during the Clinton administration. Mark was a political appointee there, and acquitted himself very well. Obviously Robert Rubin didn't appoint him because of his family's Republican background.
Early in Bush administration The New Republic did an article say the Bushies want to politize the Economic numbers. "Everything is politics with these guys". If true where else are they cooking the books?
Want to bet the best place to start are the unemployment numbers?
Posted by: llamajockey at September 21, 2004 04:53 PMThe "problem with Mark" is that the way he conducted himself at Treasury (and CEA) did not prepare anyone for how he would conduct himself at HHS.
Posted by: cb at September 21, 2004 05:13 PMI think we're missing the forest for the trees here.
In a world turned upside down, the best way to enhance your reputation is to dispense with integrity; the best way to consolidate power is to act incompetently; and the best way to win an election is to lose it.
The neocons? Turns out, the only regime they ever really wanted to change is this one. And at this point,they've pretty much finished the job.
For guideposts in this new topsy turvy world, try starting with Shadia Drury's "Noble Lies and Perpetual War"
http://www.uregina.ca/arts/CRC/
Here is another with an enhanced reputation (and the first to leave?): John DiIulio of "Mayberry Machiavelli" fame. His over-the-top apology (through a UPenn press release) was both hilarious and a little frightening.