Medicare reform will shift costs to Medicare beneficiaries (and everyone else) regardless of the approach taken

One thing most people agree on is that Medicare is a major portion of government spending and its costs are out of control.  Beyond that, on the surface at least, there appears to be a great deal of disagreement on how to fix the problem. The Ryan plan has drawn a great deal of attention and criticism.  The Obama plan is less controversial, and likely less effective.  However, in the final analysis both plans are quite similar, they both will shift costs to Medicare beneficiaries while limiting what Medicare spends.  You cannot limit what Medicare spends without shifting costs to someone and that includes health care providers, beneficiaries and the general public.  If anyone tells you otherwise they are…well let’s say they don’t know what they are talking about (or they are a politician).

An excellent analysis of this situation written by Professor Laurence Kotlikoff  appears on Bloomberg.com   I urge you to take a close look. 

Medicare beneficiaries, both current and future are going to pay more for their health care through a combination of higher premiums for both basic Medicare and supplemental coverage and higher out-of-pocket costs as well.  Physicians and other providers are going to receive less in payments and be squeezed to provide fewer health care services (as I have said many times before, not necessarily a bad thing). This means more cost-shifting to non Medicare patients and payers.

Whether it is a Ryan type change in the structure of Medicare or an Obama type less transparent reduction in coverage, Medicare is going to change.  The real question is which approach (or some other) most fairly distributes the burden among all stakeholders both present and future…and of course, which approach is truly effective.