Just the Facts on Medicare Costs and Insolvency
Senator Schumer is down on the floor now 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 Senator Schumer conveniently fails 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. Passing a $2.6 trillion expansion of government entitlement spending (funded by double-counting Medicare savings) exacerbated the crisis substantively. Attacking proposed solutions without acknowledging that Medicare is already running deficits, and scheduled to become insolvent within the coming decade, only exacerbates the political sclerosis surrounding entitlement reform.