Medicare – Can We Afford It?

Medicare, can we afford it? The gravy train ride is generating trillion dollar deficits and it has to stop somewhere. While consumers have cut back in spending and reduced personal debt the federal government is still having a party.

Problem is, they are partying in our home and on our dime.

That means we are left to pick up the empty bottles, clean out the ashtray’s, wash the dishes and pay the tab.

Consumers have acted responsibly during the recession and it has not been easy. Some have lost jobs, lost homes and families have broken up. Sad as that is, most of it could have been avoided.

As a nation, we partied too long, running up charge cards and treating our homes like a personal ATM, never worrying about how we would pay for the good times. The recession has hit everyone, both rich and poor.

We have learned our lesson but Washington has not. Their answer is to raise taxes on everyone, not just the rich. They say they are increasing taxes on big business but never say where businesses get the money to pay the taxes.

It is from you and me.

Almost half of what the government spends is for three so-called “entitlement” programs plus interest on the debt. In the 2010 budget (with a $1.3 trillion deficit), Medicare and Medicaid consumed 23% of dollars spent, Social Security another 20% and interest on the debt was 6%.

Another way to look at it is this.

For the 2010 year the government will spend $2.2 trillion in dollars they collected from us, plus another $1.3 trillion they borrowed (or simply printed). So looking at just the $2.2 trillion in cash on hand, they spent $1.7 trillion on Medicare, Medicaid, Social Security and interest.

That is 77% of what they actually brought in that went back out the door for things that have nothing to do with national defense.

Sooner or later, cuts will have to come in these entitlement programs. Taxing the rich won’t be enough, neither will taxing companies that simply trickle down the taxes to consumers in the form of higher prices.

Kaiser Health News printed an interview with Douglas Holtz-Eakin, former CBO director. Here are some of his observations.

If you want to overhaul entitlements, where do you start?

Social Security is easiest. Health is bigger numbers and we know that, but it’s all intertwined with the [health care law]. The president has put a political firewall on that. 

That’s one of the greatest disservices of the act. It paralyzes real entitlement reform for a period, at least until after 2012.

Which perhaps not so coincidentally is after the next election . . .

If Republicans win big in the next election, what happens to the health law and entitlement spending?

If Republicans take the Senate in 2012, then here we go, if they take the White House, [the health law] is gone.

I think it’s a no-brainer to say we simply have to put [entitlements] on a budget. If nothing else, let’s say we have a budget for Medicare and Medicaid. And a good way to budget in Medicaid is in fact to give a fixed grant, a block grant, to the states. That limits taxpayer exposure.

Well, it doesn’t REALLY limit taxpayer exposure, but rather it shifts the cost of care back to the consumer. In other words, rearranging the deck chairs without accomplishing anything.

It get’s the federal government off the hook but not us.

How will the pressure on entitlement spending affect implementation of the health law?

If you look at this from just a budgetary [standpoint], I really believe these pressures are going to grow enormously, and I think the Affordable Care Act will come under pressure.

I always believed [the law] was a dead man walking from the beginning. It’s going to fall under its own fiscal weight. It has so many bad internal contradictions. I have employer-sponsored insurance I get no help. This identical person doesn’t have employer-sponsored insurance, they [get a subsidy]. The law, I don’t think, can hang together over a long period of time. I think [Republicans] should help topple it faster. 

This is not a Republican or Democrat issue. This is a national issue that affects everyone, regardless of political affiliation. It is time to stop the political finger pointing and attack the problem head on. We cannot continue to bury our head in the sand and pretend it will go away.

Because it won’t . . .