Medicare trust fund to be tapped out by 2017

Bond Markets seem to be concerned over the escalating level of U.S. Government debt.  Yields rose during the latest $14 billion auction of U.S. 30-year Treasury Bonds.  This graph shows an ominous budget deficit trend as well.  There seems to be good reason for this.   American’s stimulus plan and entitlement programs are putting an…

Medicare Explained

How much of my salary goes to pay for Medicare?   What is the difference between Medicare Part A, B, C and D? What is a donut-hole? [hint: They don’t have them at Dunkin’ Donuts] The Incidental Economist has a concise, easy-to-understand three-part series of posts on Traditional Medicare, Medicare Advantage, and Medicare Prescription Drug…

No Increase in Social Security Benefits

The N.Y. Times reports that Social Security benefits will not increase this year.  This makes sense on a number of levels.  First, over the last year we have been experiencing deflation.  The CPI decreased -0.4% between March 2008 and March 2009.  Second, wage growth has been negative as well over the past year.  Unemployment has…

Costing Methods

How do hospitals estimate the cost of different inpatient stays?  A paper by Clement et al. (2009) reviews 3 techniques: Microcosting. “With microcosting, a detailed list of each component of a patient’s care is created and costed separately for each facet of a patient’s hospitalization. Given the level of detail, microcosting is generally considered the…

Is MediGap efficiently priced?

In 2004, 29% of Medicare enrollees had Medigap coverage.  Are these policies priced efficiently? An NBER paper by Maestas, Schroeder and Goldman (2009) argues that the answer is no.   Prior to July 1992, Medigap was minimally regulated.  With the passage of the Omnibus Budget Reconciliation Act of 1990 (implemented in July 1992), Medigap plans…

Age Inflation

Medicare was implemented in 1965 to cover the medical costs of the oldest members in society.  In 1965,  the U.S. life expectancy was only 70 years old.  Now, however, life expectancy at birth is over 78 years.  Medicare is now not just covering the oldest of the old, it also covers the “moderately” old since…