Counting and Double-Counting In Medicare

April 14, 2012

Steve Rattner put his ignorance on public display again in a column in the NYT.  He told readers that counting the savings projected in Medicare as a result of the cost controls in President Obama’s health care reform as lowering the budget deficit amounts to double-counting. There is a simple word for Rattner’s claim: wrong.

The logic is simple. The Medicare program is counted as part of the overall budget. (If Rattner has other information on this point, he could do a great service by sharing it with NYT readers.) However, part of Medicare (Part A, which covers hospital insurance and most other medical bills of seniors) is also required to be funded by the designated Medicare tax. Any savings in this portion of the program will improve the finances of the Medicare trust fund and also reduce overall expenditures, thereby leading to lower budget deficits.

This really is not rocket science. We finance some categories of transportation spending from the Highway Trust Fund, which relies on revenue from the gas tax. If we reduced this transportation spending it both frees up money in the trust fund and also reduces the budget deficit. There is no double-counting here, it is just counting pure and simple.

It is bizarre that this accusation of double-counting keeps coming up. It is wrong and does not belong in a serious newspaper.

(btw, health care costs in the United States are a huge problem. If the elites were not such ardent protectionists, they would be looking to have free trade in Medicare and health care more generally.)

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