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  • White House Shirks Responsibility to Address Medicare Insolvency

    If lawmakers are serious about tackling out-of-control government spending, they have no choice but to tackle entitlements. Medicare, Medicaid, and Social Security are the three largest entitlement programs and together represent 40.2 percent of the President’s fiscal year (FY) 2012 budget. For the sake of comparison, total spending on national defense amounts to less than half of that at 19.3 percent.

    Though President Obama’s rhetoric acknowledges the need for reform, his actions indicate unwillingness to address the issue. The President’s FY 2012 budget includes no substantive commitment to reduce entitlement spending, and the White House has expressed that Congress should instead make the first move. The Hill reported that House Speaker John Boehner (R–OH) has “personally promised Obama that he will stand side by side with him to weather the strong political backlash expected from any proposal to cut entitlement costs.” Even so, the White House remains quiet on entitlement reform. This isn’t just irresponsible; it’s actually a disregard for the duties of the Administration under the law.

    The Medicare Modernization Act of 2003 created a “trigger” to require presidential and congressional action to address Medicare’s future unfunded obligations. Heritage expert Robert Moffit explains:

    If more than 45 percent of Medicare expenditures were projected to come from general revenues (as opposed to dedicated revenues such as payroll taxes and beneficiary premiums) within a seven-year actuarial period, the trustees would issue an “excess general revenue Medicare funding” determination in their annual report. Two consecutive “excess general revenue Medicare funding” determinations generate a “Medicare funding warning,” triggering action by the President and Congress. The President is required to address the funding warning in legislation within 15 days of the next budget, and the proposal needs to receive expedited consideration in Congress.

    In August, the Medicare trustees triggered the warning. President Obama released his FY 2012 budget on February 14—devoid of any mention of Medicare reform. The President then had 15 days to offer a solution to address the fiscal imbalance. That deadline came and went with nothing from the White House.

    According to one official, the Administration disagrees with the metric used under the trigger. But as more of Medicare spending draws on general revenue, spending on other priorities gets crowded out. Moreover, regardless of the metric used, it is no secret that Medicare in its current form cannot be sustained long-term. Spending on the program as a share of gross domestic product is projected to triple by 2050.

    The White House has also pointed to Obamacare cuts to Medicare as extending the life of the program by 12 years. However, these savings are already spoken for to fund new health care spending. Medicare’s chief actuary and the Congressional Budget Office director warn that these double-counted savings can be used only once: either to fund new programs or to extend Medicare’s solvency. Moreover, the actuary reports that the savings are unlikely to materialize as they would threaten seniors’ access to care.

    This isn’t the first time liberals have ignored the Medicare trigger. For the past four years, Congress has voted to ignore the trigger altogether, despite the fact that, in 2008, President Bush did submit a proposal to address the shortfall.

    Under the 112th Congress, the trigger is back in effect. That leaves the ball in President Obama’s court to address Medicare’s unaffordable spending trajectory. Unfortunately, the chance to work with Congress to reduce the insolvency of entitlement programs will likely come and go as yet another missed opportunity for the White House to demonstrate fiscal responsibility.

    Posted in Economics [slideshow_deploy]

    5 Responses to White House Shirks Responsibility to Address Medicare Insolvency

    1. Kevin H, college par says:

      Shirks responsibility to address Medicare solvency? Do you not recall a health reform bill being passed last year? That is the much needed first step. Speakign of shirking – when is the Republican controlled House going to do anything on jobs and the economy? They keep spending days on end talking about health care and spending cuts – which would do nothing but hurt the economy – where are the jobs bills?!?!?!

    2. George Colgrove, VA says:

      We should not only focus this failure on the White House, I have not heard much from the new republicans other than Bachman.

      This discussion is being avoided by the entire federal governemnt. There is too much money they can take for their personal wealth for then to stop this corrupt program.

    3. Bobbie says:

      As we witness on a daily basis, democrats and the President will do anything to avoid responsibility (they see responsibility as "extreme" along with everything else that's expected of them.)

      I appreciate Paul Ryan's consideration to suggest all who receive social security now or are close will not be effected. As it stands social security should fluctuate according to life's expectancy, which has increased.

      There has been alot of corruption infiltrated wherever government and tax dollars are involved. People will toughen up when weakness isn't leading.

    4. OhioHistorian says:

      We teach Boy Scouts in their citizenship requirements, that if you disagree with a law, you work to change it. Here is a third example (immigration and DOMA being two others) that the Obama Administration has refused to follow the law.

      When will the Congress do like they did in the 1970's against Nixon, and take him to court for not following the law?

    5. Dave, Tampa says:

      Why do you roll SS into the mix. SS is fine and does not need t be reformed so that it can continue to support other govt programs. SS has a surplus of 2.6T that the politicians have borrowed. SS needs some work down the line but should not even be part of the Federal Budget discussion. It's taxed separately and should be managed separate from the Federal Budget that supports other programs.

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