Monday, January 22, 2007

Some futures aren't much fun to contemplate - II

Medicare has an enormous financing problem that most people probably don’t think about, or even know about. The problem is Medicare's crushing future liabilities, 90% of which must be paid from future federal budgets (the other 10% will come from contributions, e.g., Part B premiums paid by Medicare beneficiaries). Taxes must be levied to cover these Medicare liabilities as they become payable.

Many people know that Social Security income benefits (the “OASDI” funds) face this kind of financing problem. However few people know that Medicare has the same kind of problem as Social Security – and it’s much bigger.

OK, so how big are the Medicare liabilities? As of 2005, “(p)roviding promised Medicare benefits is projected to require over $2.7 trillion (in nominal dollars) in new tax rev­enues over just the next 10 years . . . Medicare’s financing problems will arise sooner and ultimately surpass Social Secu­rity’s financing problems.

$2.7 trillion is an incomprehensibly large number of dollars, but just consider that the TOTAL RECEIPTS of the U.S. government for fiscal year 2006 are expected to be less than $2.5 trillion. Given that future Medicare costs are no small problem, have you ever heard a member of Congress discuss them? Have you ever heard a member of Congress suggest a way to deal with them, on his way out of the room?

Frequently this or that politician or commentator suggests a solution to our present health care cost and access problems is “Medicare for all”. There are about 45 million Americans covered in Medicare. Before the public entrusts the government with health care for more than 200 million additional people - in any form, whether "Medicare for all" or not - shouldn't more people understand the problem the nation faces in paying for the Medicare liabilities that already exist?? Some futures aren't much fun to contemplate.


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