The Medicare Sky Is Falling
by run75441
“The Medicare Sky Is Falling”
Chicken Little, Courtesy of “EW.Com Entertainment Weekly”
A recently released Medicare Trustees report detailing the insolvency of Medicare HI has been used by conservatives and supporting news media to call again for an overhaul or privatization of Medicare to save healthcare for those on Medicare.
“The gravest threat to Medicare is doing nothing. If we do nothing, not only will Medicare collapse but so will our fiscal house.” Thursday, May 26, 2011; Senator Dan Coates Indiana
This is not the first time a politician, a think tank, or the news media has predicted the demise of Medicare due to exhausting its funds (Table 1). Both Medicare and Medicaid have also been identified numerous times as being the cause of rising healthcare cost resulting in calls for drastic over halls, privatization, state voucher programs, complete elimination, etc. In any case, 40 years later Medicare is still here and its funds will not be exhausted as claimed in the recent New York Times and Wall Street Journal articles. Instead, the program will not be able to meet its entire obligations for Medicare HI. At the Chicago Tribune, Eric Zorn culls from the news media examples of the sky falling in on Medicare: Medicare is Going Bankrupt Again” May 5, 2011
“The Medicare hospital trust fund faces bankruptcy by 1976 and taxes must either be raised or benefits reduced the senate finance committee was told today.” Chicago Tribune, July 2, 1969
“In the last few years, when it appeared that the Medicare trust fund would run out of money in 1987-89… But the need seemed less urgent after the Congressional Budget Office issued new estimates last September indicating that the Medicare trust fund would not go bankrupt until 1994.” The New York Times; January 20, 1985
“The Medicare hospital insurance program faces bankruptcy by 1996, two years earlier than projected last year.” The Washington Post; April 1, 1986
“Medicare trustees reported Wednesday that the program’s financial outlook is getting worse, touching off a new round of debate over the future of the federal health insurance system for the elderly and disabled. According to the trustees, who give the program a fiscal checkup every year, the fund that pays Medicare hospital bills dipped into the red last year and will go broke in early 2001. That’s a year earlier than they predicted in 1995.” “DIRE FORECAST SPARKS NEW MEDICARE DEBATE TRUSTEES’ REPORT USED AS FODDER FOR POLITICAL SALVOS BY BOTH SIDES,” The Chicago Tribune; June 6, 1996.
40+ years and the “EverReady” Medicare HI Bunny is still solvent as Eric Zorn shows in the chart above and details in his article. Much of today’s issues can be blamed on a smaller working Labor Force resulting in lower tax revenues.
The attack on Medicare with the threat of vouchers or overhaul has never had justification beyond “the sky is falling” proclamations. Furthermore such an overhaul would have no impact upon rising healthcare costs. Try (I did) finding out what certain services cost so you can control the cost of an outcome in a privatization scenario, when you are seriously ill, and the answers or non-answers from your doctor and the staff will only forestall your diagnosis/remedy. Similar to a 401K, the impact of proposed privatization and voucher plans shifts the burden of rising healthcare costs and risk to the healthcare recipient who will have far less of an impact on those rising costs as an individual and far less on a healthcare system encountered. The same as private insurance, Medicare and Medicaid reflects the rising cost of the healthcare industry intent on the selling of service, procedures, and product with Medicare being more efficient in controlling those costs in comparison. In the end; a few tweaks here and there as Coberly, Bruce, and others have suggested will provide a temporary fix to Medicare without impeding access to healthcare and not provide a solution to rising healthcare costs.
You said it youirself, ”resulting from lower tax revenues.”
So raise taxes on the wealthy and the corporate, end the social security income cap, have corporations pay into the Medicare system.
End of problem.
From here: http://ragingcapitalist.blogspot.com/2010/03/history-of-medicare-and-social-security.html
“Medicare was legislated in 1965, and a new payroll tax was implemented in 1966 to cover the expense of the new entitlement program. The initial tax was 0.35%, payable by both the employee and employer on the first $6,600 of the employee’s wages. The $6,600 upper wage limit rose by about 50% in total over the first 8 years, and then dramatically increased thereafter, until reaching $135,000 in 1993. That represents about an 11.40% annual increase between 1966 and 1993, whereas inflation increased at an annual rate of 5.38% during that time. The upper wage limit was eliminated in 1994, meaning that the tax began to be charged on all wages at that time.
While the Medicare wage limit was being increased, the tax rate was increased continuously as well. It approximately tripled in the first 8 years from 0.35% to 1.0%, and eventually hit the current level of 1.45% in 1986. In dollar terms, the amount collected on the wage limit maximum from both the employee and employer increased from $23.10 in 1966 to $1,957.50 on the $135,000 limit that was in place in 1993. That represents a 17.2% annual increase, whereas, as noted above, inflation increased at 5.38% over that period. Hence, the maximum tax was increased at over 3 times the rate of inflation, and again, there has been no maximum tax since 1994.”
The Dem answer, raise taxes to spend more on entitlements. ;o And, when entitlements become a recognized budget problem the Dem solution is to add even more, Obamacare. Yeah, that’s the ticket.
Let’s tweak it again, and again, and again and …, and ignore the fact that each tweak is a tax increase, taking more and more from consumers. Why worry about having “demand” issues in an economy? The Government can fix it! Yeah, that’s also the ticket.
Corev,
No real “fix” or “change” happends in America till it’s too late. Let the Progressives keep raising taxes and “tweaking” everything until nothing works anymore. It is the only way they will ever learn and be proven to themselves the ridiculous nature of their ideas.
They are the ones who claimed to have all the “Solutions,” and anybody who disagreed was stupid. Let them implement those “Solutions,” if they truley are long term solutions, then problem solved, if they aren’t then we still end up in the same place we were headed for originally. The best way to learn is to feel consequences from ones mistakes.
What insurance could possibly be better for Americans than the Paul Ryan Kick the Poor, Sick and Old to the Curb and Watch Them Die plan (now known as Medicare and Medicaid)?
What insurance could possibly be better for Americans than the Paul Ryan Kick the Poor, Sick and Old to the Curb and Watch Them Die plan (now known as Medicare and Medicaid)?
Fear monger much?
“The Dem answer, raise taxes to spend more on entitlements.” CoRev
Entitlements is a very interesting word. It is a short and simple means of obscuring just what it is that is provided by the particular program/system that the use of the word, entitlement, tries to obscure. We are talking about health care for older Americans in this case. We are spending too much on health care for older AQmericans? The government has certain responsibilities to its citizens. In America we decided at the rather late date of 1965 that health care insurance for the older sector of the population, regardless of level of income, was an essential need in our society. Who out there is against that concept, health care for the older Americans of all income levels.
It costs too much? By whose set of values? It’s a basic social need. Warf is not such a need. Saving tens of thousands of dollars each year on an outsized income via the continuing tax advantages first enacted by the Bush led government is not such a need. How health care for older Americans is funded is the issue, not the health care itself. Nothing has ever been cost contained or improved through privatization. That was the case for health care before 1965. That’s why the Medicare and Medicaid programs were enacted. The private sector was failing to provide for that basic need. The only thing that costs too mcuh in America is the share of GDP that flows to the coffers of the One Perlcent club each year and then escapes significant taxation. Why don’t we hear more complaints about that entitlement program for the members of the Lucky Sperm Club?
Jack, this what Auburn Univ. (2nd paragraph) says about a government entitlement programs: “The existence of entitlement programs is mainly significant from a political economy standpoint because of the very difficult problems they create for Congress’s efforts to control the exact size of the budget deficit or surplus through the annual appropriations process. It is often very hard to predict in advance just how many individuals will meet the various entitlement criteria during any given year, so it is therefore difficult to predict what the total costs to the government will be at the time the appropriation bills for the coming fiscal year are being drafted. This makes it even harder for government to smooth out the business cycle or pursue other macroeconomic objectives through an active fiscal policy — because these objectives require careful pre-planning of the size of the budget deficit or surplus to be run. In the first place, the amount of money that will be required in the coming year to fund an entitlement program is often extremely difficult to predict in advance because the number of people with an entitlement may depend upon the overall condition of the economy at the time….”
It can be found here: http://www.auburn.edu/~johnspm/gloss/entitlement_program
Other than your unrelated rant, Auburn makes the case how entitlements affect budgets.
No shit, Sherlock. All spending affects the budget. And who the devil cares what Auburn U says about anything? The Congress, in its wisdom and in response to the expressed interests of the electorate, passed legislation that set up health care funding systems for both the poor and older Americans. That’s the crux of the matter.
Mr. Ryan, the Republican Party in general, you and all your fellow travelers seem to miss the point that in the past health care services for the poor and the elderly, who are also the major sub set of the poor, were failing to meet the needs of those people. They couldn’t afford health care, that’s medical services, and it was decided that in the long and short run it costs less to set up Medicare and Medicaid rather than continue to have those Americans use catch as catch can medical services. Mostly ERs in most cases. The most expensive way to provide helath care. So find all the university citations that suit your agenda and it still won’t amount to bullshit. Health care is considered to be a basic American citizen need and it needs to be paid for one way or another. The private sector failed. Been there, done that. Medicare and Medicaid has worked. The money? This is still the richest country in the world. Only the distribution and tax systems are f____ked up.
Darren,
Name calling and cries of stupid has gone both ways, but is part of an election process I guess. One of the things to avoid is saying the ‘progressives’ believe and such and the ‘teaparty’ and such believe.
I can name political contenders proposing different “policies” with varying degrees of specifics and numbers.
You conveniently ignore numbers re medicare and cost control versus the private sector increases in costs say of ins. premiums. You also ignore the origins of Part D, a real budget buster in the details. How convenient.
Corev,
Hmmm…medical inflation at 5%?? And Part D this last decade?
We have a problem, but the issues get played from so many angles it is hard to keep track. The costs of healthcare eat up private monies even faster than Medicare…where is the plan is a great question, but we have start at different reference points.
I believe NO has stated a point of view here…having something to do with Sherlock I believe. But given the constant electioneering and partial answers proposed as absolute, I don’t think innovation is on the table yet.
python
i don’t agree. we need medical care. we need to pay for it. we don’t need to have the rich pay for it.
even if costs keep going up… they shouldn’t… the trustees project that while Medicare (HI) would become a larger share of your income, your income would have grown in absolute dollars so much more than Medicare (and Social Security) that you will have twice as much money AFTER paying for them than you do today.
I think it is very dangerous to expect the rich to pay for everything. They won’t want to and they will kill the program.
SS and Medicare work because they are worker paid. What they do is allow you to pay for your retirement and your medical care in retirement while you are working i non-inflated dollars. That means that when you do get old, your expenses will already have been paid for.
the way this works… pay as you go… is really quite simple, but it seems to destroy the minds of people who don’t want to understand it.
CoRev
you are scaring yourself to death with bogus arithmetic. i am pretty sure you didn’t think this up yourself. you need to find an honest source.
the cost of medical care has gone up. that means the tax that pays for your medical care after you retire has to go up. I DON’T think it is a good idea to raise the cap… as was done for Medicare… but until Americans can understand the need to pay for what they need, we are going to have a problem with that. It would help if there was some honest discussion of the problem instead of the lying “debate” we are having.
CoREv
now you are lying to yourself. please. most people here are not that stupid. the Bush drug benefit was a Bush plan. he’s a republican y;know. and not paying for it was another Bush idea… the idea being to make Medicare go “bankrupt.”
The projected surpluses disappeared after the Bush tax cut, and the Bush war in Iraq. So try not to fool us.
When you are paying for SS and Medicare, you are NOT paying for “government” you are paying for your own retirement and medical insurance.
CoRev
I guess “Auburn” writes bullshit. Social Security and Medicare pay for themselves. So they have nothing to do with budgets and fiscal policy. It’s like saying that because people have to eat, employers have a hard time balancing their budgets and investing for growth.
Yes we could all be rich if we didn’t have to eat.
Jack
i agree with you in spirit. but actually SS and Medicare do not affect the budget.
with this hedge: Medicare was effectively destoyed by turning it into welfare in part… that is paying for part of it “on budget.”
WE need to go back to paying for it directly, with the payroll tax. And we need to keep the liberals from saving social security by turning it into welfare as we knew it.
What’s funny about that is that the Petersons have been lying about SS for years calling it welfare. And now the liberals want to turn it into welfare so Peterson can be telling the truth when he destroys it.
Dan, Medicare in the 2010 HHS budget was estimated to be ~$510B, and Part D was ~$68B with ~$4.1B in fees collected. Part D is 12.5% of the Medicare budge, and ~1.9% of the overall budget. that is hardly a budget buster.
Dems had proposed a prescription benefit for decades, but it was passed under Bush with a bipartisan vote. They chose not to fund it as CBO had been predicting budge surpluses as far as the eye could see. We voters were not going to accept additional taxes when we were supposed to see surpluses.
Dan, taken from my comment medicare collections increased: “...That represents a 17.2% annual increase, whereas, as noted above, inflation increased at 5.38% over that period. Hence, the maximum tax was increased at over 3 times the rate of inflation, and again, there has been no maximum tax since 1994.”
Now, Govt spending is part of most cost calculations, accordingly, some of that huge increase in healthcare cost included the increase in medicare collections. I don’t want to do the research to get the numbers, but the Dem talking points are shaky.
No CoRev:
“The Dem answer, raise taxes to spend more on entitlements. ;o And, when entitlements become a recognized budget problem the Dem solution is to add even more, Obamacare. Yeah, that’s the ticket.”
The Dems answer is to use Medicare to control the costs of rising healthcare costs as cause by services for fees in today’s environment and fed by a healthcare industry thriving on increased services. That is the ticket CoRev. Change te paradigm.
More in Part 2 & 3
CoRev:
Of course budget surpluses can be predicted beyond 2010 and that would occur under current law practice where te 2001 taxes were used in 2011 to budget revenue. They never projected 2001/2003 tax breaks beyond 2010 hence the ability to project surpluses.
“Boss! DA Plan!!!” CoRev try this:
ACA which eliminates the 14% premium surcharge supposedly more efficient private insurers collect under Medicare Advantage even though in practice they are able to game the risk pool to attract lower cost enrollees.
ACA which encourages early detection and hence less expensive long term costs by eliminating co-pays for preventive care to include such things as routine check ups, maternal, child and well baby care including vaccinations. How much could be saved if everyone at risk of heart disease ans stroke simply started the right blood pressure medication PRIOR to that ER visit fot a major heart attack or stroke? WE don’t know but potentially trillions.
ACA and IPAB which replaces insurance company bureaucrats who make coverage judgments solely on the basis of short term claims costs with medical professionals with a focus on effectiveness.
ACA and the elimination of the Part D donut hole which cause too many seniors to cut dosages or skip them altogether turning preventable conditions into crises that potentialy require years of avoidable custodial care.
Which is why the 2010 Medicare Report showed a 75% reduction in Part A Infinite Future actuarial gap or something on the order of $30 trillion using the measure most favored by the Peterson folk.Oddly this huge improvement which was only partially (less than a third) reversed by the new assumptions in the 2011 Report got essentially no notice even though the COMBINED result of both Reports still is a dramatic improvement in long-term actuarial gap.
Did I just miss all the comments you made to the Dems for that $30 trillion in savings? Because in light of that your claim that Dems have no plan falls to pieces. Rs don’t like the plan because most of its savings come at the expense of insurance companies and fraudulent hospitals (think Gov Scott) and infinitely prefer the Ryan Plan that instead fattens insurers bottom lines even as it cost shifts to seniors. But not liking the Dem plan doesn’t equate to its non-existence.
CoRev if you were just a simple ditto-head parrot we could talk. But you constantly show enough command of the data sources to remove yourself from the category of Fool to that of Knave (which sounds better than its modern equivalent of ‘bald faced liar’) and just work off the same set of talking points.
I only hope that like your predessessor Patrick R Sullivan, aka PRS, aka Roland Patrick that you actually are on the payroll of someone. I mean even a Mafia lawyer has a shred of legitimacy. But there is a line between paid advocate and blind shilling apologist that you by surface appearances transgressed years ago.
And if that is just in your view mindless ad homs so be it, I don’t spend sleepless nights wondering how I can get back in the good graces of Sammy and CoRev.
I’m well aware that SS and most of Medicare is off budget and supported by a dedicated revenue stream. I was only replying in abbreviated form to CoRev’s rediculous refeerence to something written by Auburn Univ., though I don’t see how a university can produce a report of any kind. Strange that the reference was not to the author(s) of the report. Maybe it was a Master’s thesis by an erstwhile grad student.
This from the Party of “Death Panels”?
I am curious. Is there some med you take to treat your case of Cognitive Dissonance? Or do you just suck up and soldier through the deafening din in your head?
Darren
what taxes have been raised? since when do “progressives” have any effect on policy?
i personally know what works and i can’t get a hearing. the trouble is that the democrats have been going to the same cocktail parties as the Peterson gang.
I think you must be getting your facts from Fox News. you should try to find out what really has been going on.
oh, it’s not that i am so smart. it was FDR that was so smart. the New Deal worked. It’s all the lying about it that has caused all this trouble.
thanks jack.
i do that shorthand thing myself.
but i needed to set the record straight in case anyone was listening.
Dale you are not doing our side favors by stating true facts about Part A (“does not effect the budget”) that simply are not true of Parts B, C, and D which collectively make up half of Medicare expenditures. Premiums under B and D cover only around 25% of their cost.
The General Fund picks up 40-45% of total Medicare which is why we have to revisit the Part B ‘Doc Fix’ year in and year out. Inconvenient for those of us who are defending a combined model largely based on worker funded insurance, but we are not talking some marginal effect here, these are big numbers.
Odd, how the Republicans never mention that their tax cuts—cutting taxes and then maintaining the tax cuts rather than allowing the ones with (supposed) expiration dates to expire—will undermine the solvency of Medicare. Instead, they pretend that the two are unrelated. Then again, it’s odder still that our Democratic president never mentioned it last winter before he allowed the extension of ALL the Bush tax cuts. And that, best as I can tell, he still isn’t mentioning it, even in response to the House proposal to replace Medicare with a voucher system.
Cute little Chicken—I mean, Chicken Little—though, run.
Run, this comment is too confusing. What’s this supposed to mean: “Of course budget surpluses can be predicted beyond 2010 and that would occur under current law practice where te 2001 taxes were used in 2011 to budget revenue.”
If you are trying to say using the Bush tax cut revenues in the 2011 budget estimates would balance it, then you are seriously wrong. If that’s what you mean, please do the math.
Bev, its fascinating the Dem mind. Blaming republicans for extending the Bush tax cuts when the Congress and president were dems. Amazing cognitive dissonance.
Corev,
Blaming Republicans? No, Bev said Republicans don’t mention tax cuts impact in relation to vouchercare. Nor the additional cuts added to the Bush tax cuts. What the Dems do is another matter. Nice try.
CoRev,
The dems plan………………..
The dems could not find a plan in front of them with both hands and a headlamp.
ilsm plan:
Reduce the military industry congress cpmplex by fully two thirds in every measure from 11 carriers to 4, that would be 4 more than anyone else, who are not defended by two oceans. Reduce US combat aircraft from 6000 to 2000. Reduce US combat brigades from 90 to 30. The USMC to one division and 2 amphib ready groups. Sell military transport missions to the airlines, give them the planes free and expect them to make it work.
Then take that famous list of overrunnners and waste the GAO studies every year and terminate all of them for default, and jail all the government contracts officers who have not done their sworn duty.
Then I would sell the DoT mainly the FAA, and see what airline tickets cost when someone runs air facilities with no tax influx.
About then the US will look like the UK in terms of corporate welfare spending.
The repub plan clutching to Henry Luce’s views of empire, and Methodist missionaries to China and central Asia, pays the owners and rentiers.
What do you expect from the dems?
Coming from CoRev, the master of ambiguity and equivocality, the former statement is worse than the pot and kettle concept. He makes it up as he goes along and then searches out obscure references for support regardless of their validity or appropriateness to the point. He casts aspersions around as though they were baseballs at the Polo Grounds, and they are about as pertinent to the discussion.
Bruce
see exchange with Jack re shorthand. I tried to make the point that I beleive that putting parts BC and D “on budget” was the road to hell for Medicare. It’s a road we need to avoid in the case of OASDI and HI.
Meanwhile it is the Trustees Report that is the basis for all the hysteria.. and the Trustees Report only covers HI. so all I can do is point out that if the Trustees numbers are true, there is no basis for hysteria.
What we do with “the budget” including the part of Medicare that is “on budget” is an entirely separate problem.
CoRev
as I remember the Republicans twisted Obamas arm re extending the Bush tax cuts. I am willing to blame Obama for caving on this. And for general stupidity in calling for only taxing the richest.
But it would help make this conversation actually useful if you could manage to be honest about anything.
YOu don’t seem to know what “cognitive dissonance” means. But it sure sounds impressive. And cute when you say it.
Every thing you say is correct and the philosophy of paying our own way is sound. One problem, however. There is contnuously less income from which to pay for these essential aspects of life, health care and retirement. Why is there less income for workers? Because there is so much more income for the very wealthy. As they take a larger and larger share of the GDP the rest of the population has less to get by on. So yes, the workers should pay their own way, but the economy needs to make certain that they are n ot being marginalized by the distribution of the income produced by that economy. On top of that the tax system is all screwed up and results in the sector with the biggest share of the pie paying the least for that share.
Beverly
CoRev is only here to assure us all that he is right about what ever issue is being discussed and he’ll find some obscure reference that supports his contentions. He is one of those loyal Americans that has his share, paid for by the government, and doesn’t see the need for anyone else to be entitled to a similarly earned share. Can we balance the budget by cutting back on military pensions?
CoRev:
Literally that you don’t understand how Bush and Repubs forecasted surpluses says much of your lck of knowledge on the topic or your willingness to skew the discuss “Quell Surprise.” I am not trying to say anything, I said it.
The Senate Republicans were filibustering a budget agreement, CoRev. Remember? If you don’t—and I guess you don’t—go back and read the news reports about it.