Monday, July 26, 2010

Spreading the Wealth Around…

The Wall Street Journal has an article this morning, entitled “Health Law Augurs Transfer of Funds from Old to Young,” highlighting how the health care law uses more than half a trillion dollars in Medicare savings to finance new entitlements for younger Americans.  The piece notes that thanks to the law’s nearly $200 billion in Medicare Advantage cuts “dozens of private insurers that run [Medicare Advantage] plans are preparing to pare dental, vision and certain prescription-drug coverage starting next year.”  As Humana’s CEO put it, “There’s no question that either premiums go up or either benefits go down” as a result of the health care law’s cuts to Medicare Advantage.  Yet contrary to White House claims that the health law “doesn’t take from seniors to help younger generations,” the Congressional Budget Office admitted that the more than $500 billion in Medicare savings “would not enhance the ability of the government to pay for future Medicare benefits” – meaning that this spending is effectively being transferred from seniors to younger Americans.

Taking funds from Medicare to create costly new entitlements might be welcomed by President Obama, given his commitment to “spread the wealth around.”  Likewise, Dr. Donald Berwick, whom the President controversially appointed to run the Medicare program, believes that “any health care funding plan that is just, equitable, civilized, and humane must – must – redistribute wealth.”  But other Americans may be asking: How does transferring money from Medicare – which itself faces a long-term financial shortfall of nearly $38 trillion – to create a new, unsustainable entitlement system represent true “reform” for either seniors or younger Americans?