Why Health Care Reform Was NOT Entitlement Reform
Late yesterday the Urban Institute released its updated estimates about the Social Security benefits and taxes recipients will receive (and pay) over their lifetimes. (The Associated Press did a story on the report last week; however, the paper itself was not available on the Urban website until very recently.) The study found that while Social Security’s financial condition is far from sterling, Medicare’s fiscal situation is much worse. In every single age, income, and demographic group examined, lifetime Medicare benefits received exceeded taxes paid – in all cases by tens of thousands of dollars, and in most cases by hundreds of thousands of dollars. In fact, male would-be beneficiaries turning 65 this year will receive an average $110,000 more in benefits than in taxes paid, and women turning 65 this year will receive a net average lifetime benefit of $131,000.
Given this very dire fiscal predicament, what did health care “reform” accomplish for Medicare? In a word, nothing – actually, worse than nothing. Because Medicare savings will be re-directed to finance new entitlements, the Medicare actuary noted that these provisions “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under the PPACA) and to extend the [Medicare] trust fund, despite the appearance of this result from the respective accounting conventions.” So while Medicare beneficiaries will suffer reduced access, with up to 40 percent of facilities becoming unprofitable thanks to planned spending reductions, and Medicare taxes will go up on middle-class Americans (a planned 3.8% payroll tax increase is NOT indexed for inflation, so it will hit more and more working families over time), these provisions will not solve the fundamental structural flaws in Medicare that the paper released by the Urban Institute (a distinctly left-of-center organization) highlighted. It’s also why some might find the President’s purported new focus on deficit reduction a bit rich – because the health care law he insisted Congress pass made America’s fiscal situation poorer.