Tuesday, April 19, 2011

The Facts on Medicare and Entitlement Reform

The President spent time at his town hall meeting talking about how costs will be higher for future Medicare beneficiaries under the House Republican budget proposal, alleging that a comparison of expected health costs for seniors in 2022 and 2030 by the Congressional Budget Office demonstrates that Medicare beneficiaries will pay much more out-of-pocket under the Ryan plan than under current law.

There is however one minor detail that the President conveniently failed to mention: According to the Congressional Budget Office’s March 2011 baseline, by 2020 the Medicare Hospital Insurance Trust Fund will be insolvent – meaning the government will be financially able to pay MUCH less of seniors’ health costs in 2022 than the CBO analysis indicates.  (Note also that Medicare Part A has been running cash-flow deficits since at least last year.)  In order to remain financially solvent through 2022 (let alone 2030), the Medicare program will need a massive tax increase (over and above the more than half a trillion dollars in tax increases included in Obamacare), benefit reductions for seniors, or some combination thereof.

Our nation faces an imminent entitlement crisis, with Medicare already running deficits in the tens of billions of dollars.  Failing to take steps NOW to address these shortfalls – by delaying deficit reduction until after the President’s re-election campaign – will only heighten the fiscal crisis, as Standard and Poor’s concluded yesterday.  (On a related note, some may be asking to themselves:  If the President’s Independent Payment Advisory Board will have such a salutary effect on Medicare without harming seniors, why does the President want to wait until AFTER his re-election campaign to put these IPAB reductions into effect?)