Medicare’s Growing Problems
The Washington Post has a lengthy story out today on the causes of Medicare spending, and the reasons for comprehensive reform. Several thoughts regarding the piece:
- Former CBO Director Robert Reischauer opined in the article that “I think many of us would accept the fact that…payroll tax payments probably have to go up.” His quote brings up a little-discussed point: Not only do Democrats have political reasons for delaying reforms to Medicare – as numerous quotes over the past year have demonstrated – dithering aligns with their policy goals as well. After all, if you want to enact massive tax increases, the best way to achieve this goal is to ignore Medicare’s looming problems, keep on spending, wait for the crisis to hit, and then say tax increases are the “solution.”
- Medicare program head Jonathan Blum is quoted in the story as stating that a recent slowdown in Medicare spending is thanks to Obamacare. Blum’s statement ignores the Medicare actuaries’ conclusions about the prime reason for the slowdown in spending: “Estimated spending growth in 2010 was slow due to continuing declines in employment and private health insurance coverage associated with the recent recession.” In other words, spending growth was slower than projected NOT because Obamacare worked, but because the Obama “stimulus” didn’t. Surprisingly, Blum did not appear to want to take credit for the failed “stimulus” in the Post article.
- Even though the article talks about a predicted dramatic slowdown in per capita Medicare spending growth over the coming decade, those projections are based on assumptions that most experts have concluded are unrealistic. For instance, the Medicare actuary found that provisions in Obamacare “are unlikely to be sustainable on a permanent annual basis.” Likewise, CBO concluded that the Medicare reductions will be “difficult to sustain for a long period.”
- The Post article emphasizes the problem that demographics will create for the Medicare program in the medium term. According to CBO, between now and 2035, 64% of the growth in entitlement spending, and 48% of the growth in health care entitlement spending, will be driven by demographic factors associated with the retirement of the Baby Boomers and general aging of the American population. Even if health care costs were brought under control, entitlement programs face significant structural difficulties, as nearly half of the growth in entitlement spending over the next generation comes from demographics, NOT rising costs.
Medicare faces a looming financial crisis. Yet Congressional Democrats’ prime contribution to the debate this year has not been a reform proposal, but a political campaign of demagoguery dubbed the “Lie of the Year.” Republicans have offered numerous solutions to advance the cause of entitlement reform; it’s long past time for Democrats to step up to the plate.