As many, many people have mentioned before, our Federal Government is running a deficit; i.e., it’s borrowing some money on an ongoing basis to pay the bills, as the revenue coming in from taxes isn’t enough to cover everything. Both the Obama Administration and now the Republican-controlled House of Representatives have put forth budgets to address the nation’s fiscal picture. Perhaps unsurprisingly, they don’t like each others plans. However, both are being ridiculed for focusing on the very small part of the budget that is labeled “discretionary”, rather than looking at the much bigger “entitlement” portion of the budget.
Imagine that your car has an oil leak, and to fix it, you change the wiper blades.
Who wants to take a little trip to the MEDICARE ALTERATION PLACE? What? Doesn’t sound like fun? You’re crazy.
Maybe it’s not that bad, but that’s the gist of what some pundits are saying.
So how bad is it? Medicare alone will account for about $276.2 Billion in 2011, which is about 13% of the budget (here’s a fun sheet of Medicare projections!). To put this in perspective, our total Defense spending is currently around $700 Billion, so Medicare is a little bit more than a third of the military budget. However, the Medicare budget is projected to double by 2020, to about $541 Billion , while the Defense spending projected for 2020 looks like, assuming we keep pulling out of Afghanistan and Iraq, about the same numbers as today (see here). FYI: Things that double are bad.
Why is it growing so fast? Baby boomers (which there are a lot of) are getting older, and will likely increase medical costs for everyone as they age. But more than that, medical costs across the board in the US are growing at an astounding rate. Medicaid is, essentially, the healthcare program that poor people are on; whereas Medicare is the healthcare program designed for old people. Just like healthcare costs are rising for the middle-class, so to they are rising for the poor; the rise in cost is not unique to poor people, or due to the fact that it’s a government program per say.
What can we do to fix it? Lots of things – none of which seem particularly easy.
We need a budget bandage. And probably a safety pin.
1) We cut benefits This will save the program money, but will also likely hurt people who can’t afford a doctor on their own. And then there’s the question of what America looks like if the poor are allowed to simply get sick and stay sick, likely leading to higher death rates. Not a pretty picture.
2) We raise taxes. This will pay for the program, but nobody likes paying more in taxes, and anyway, there’s a real concern that, without affecting what is actually causing costs to rise so rapidly, we’ll have to keep raising more and more tax rates, which seems like a dumb thing to do.
3) We reform the medical system to stem growth in the cost of medical care. So this seems like a good idea, except that the cost savings will take a long time to fully realize. Also, it involves changing the way the medical system works (not just the medical insurance system, which is what Obama’s health care law did last year), and there appears to be no political momentum to engage in this kind of process.
So what do you think? Higher taxes? Lower benefits? Or fundamental reform? Opinions are like elbows – let us know your elbows!