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  • The Heads in the Sand Coalition Strikes Again

    Already Medicare expenditures account for 3.2 percent of gross domestic product (GDP). Medicare Part A – the part of Medicare that pays hospital bills – is already spending more in benefits than it gets in revenues and is projected to grow by 7.4 percent on average over the next 10 years. Within the next five years, general revenue transfers are expected to constitute the largest single source of income to the Medicare program. According to USA Today, taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs. That’s nearly $500,000 per household.

    In 2003 Congress tried to create a mechanism that would force the federal government to take an honest look at controlling the exploding cost of Medicare. The Medicare Modernization Act (MMA) included a provision that required the President and Congress to act whenever two consecutive Medicare Trustee reports projected that more than 45 percent of Medicare’s total costs would have to come from general revenues within seven years. This year’s Medicare Trustee report pulled that trigger. After much deliberation, the White House submitted a proposal that responded to the trigger pursuant to the MMA. But now Congress is refusing to even debate the issue, and they are trying to change the rules so they don’t have to.

    Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) told CongressDaily: “We must turn off the trigger and reject Republican attempts to arbitrarily limit Medicare financing. This is nothing more than their effort to turn the program from an entitlement to a voucher.”

    Heritage senior policy analyst Brian Riedl responds: “Although Congress is brazenly ignoring the Medicare Trustees’ warning, the coming entitlement spending tsunami is not going away. Every year of delay raises the eventual cost of reform by trillions of dollars. This is unconscionable. When the bill comes due, taxpayers will demand to know why Congress shirked their duty to confront this issue.”

    Ideally, if Congress doesn’t like the President’s proposals they should put forward their own. But at bare minimum they should at least debate the issue.

    Posted in Economics [slideshow_deploy]

    3 Responses to The Heads in the Sand Coalition Strikes Again

    1. Pingback: Out of Control « Random Thoughts from Denise

    2. Jack Lohman, Colgate says:

      So let me see if I have this correct. Medicare is spending 3.2% of GDP to cover perhaps 20% of our population. If we expanded it to cover the other 80% as well, say, with a Medicare-for-all system, we'd be covering 100% of our people for less than the 16.5% we are currently spending. Medicare is our most efficient form of providing health care because it eliminates the 31% of insurance industry waste. For more details look at the health care section at: http://moneyedpoliticians.wordpress.com/issues/

      The problem is, our insurance industry is a big contributor, not just to the political campaigns that protect their position in our "free market," but also to think tanks. If money were not playing a part in our decisions we'd fix this system overnight. But the politicians don't want it fixed, because that would cost them major contributors.

    3. Mark W. Farnham, Leb says:

      The root of all evil (okay, waste) is means testing. We would be far better off subsidizing all citizens to the poverty level with no questions asked and then letting them make their own spending choices. Then we can just argue about what the poverty level is without piling on the administrative costs and conflicting rules of each various and sundry entitlement program. Combined with equal taxes and a proforma right to keep 75% on the dollar of earned income in lieu of paying your true equal share of taxes would eliminate the need for most programs, eliminate the excuse for crimes of desperation, and greatly reduce the costs of the baseline transfer of wealth needed to minimize societal costs attributable to people living in poverty. That will help us focus on the important gap – the gap between actual income and the poverty level, and put the lie to the government having a legitimate interest in the gap between the wealthiest and the poorest. As for health care, the starting point is to prohibit group discounts and cost shifting – charge whatever you want to for any medical service, but charge everyone the same. That will put the free market to work and eliminate a huge amount of purely wasteful red tape.

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