A Few Framing Thoughts on Entitlements
Ahead of the President’s speech on entitlements later this afternoon, it’s worth re-stating a few key points regarding entitlement reform and rising health care costs:
- Democrat claims that the health care law will reduce the deficit are based upon shaky assumptions that defy logic. One premise assumes “double counting” as a result of the health care law, even though in practice both the CBO and the Medicare actuary agree that the Medicare reductions in the law “cannot be simultaneously used to finance other federal outlays and to extend the [Medicare] trust fund” solvency date. If Democrats want to use the Medicare savings provisions to extend the life of the Medicare trust fund – and not to fund the new entitlements created by the law – the Congressional Budget Office previously estimated what the fiscal impact would be: “A net increase in federal deficits of $260 billion” through 2019.
- Despite the double-counting gimmicks referred to above, the Congressional Budget Office notes that the Hospital Insurance Trust Fund is running cash-flow deficits – and will continue to do so for as far as the eye can see. By 2020 the Medicare Hospital Insurance Trust Fund will be insolvent, according to the non-partisan CBO.
- The Congressional Budget Office in June 2010 concluded that over more than thirty years (1975-2008), excess cost growth was higher within the Medicare program than in all other categories of health spending – an analysis undermining any potential attempt by Democrats that Medicare can help drive costs down throughout the health sector.
- The President may again repeat the tired old mantra that Social Security is not adding to the deficit. This claim is however FALSE, and has been exposed as such by the non-partisan factcheck.org. The fact is that Social Security is running a cash-flow deficit – the only thing allowing full benefits to be paid out are the IOUs in the Social Security trust fund, and when the government cashes in those IOUs, that adds to the deficit.
- In its first ten years of full implementation, the health care law is estimated to cost $2.6 trillion. If the President really believes that all options must be “on the table” when it comes to deficit reduction, will he propose delaying or otherwise scaling back a massive new entitlement program that NO ONE is currently receiving?
Details (such as they are) of the President’s plan or speech have yet to emerge; we will of course provide additional thoughts and analysis of the President’s speech, and his proposals, as events warrant.