Medicare is not even
close to sustainable in its present form, much less to be leveraged to cover
the entire population.
Ever since Senator Bernie
Sanders made “Medicare for All” (M4A) the centerpiece of his campaign, it has
attracted support, and others have joined the bandwagon. In a Kaiser Family
Foundation poll earlier this year, 56 percent of respondents and 81 percent of
Democrats backed “a national health plan, sometimes called Medicare for all,”
which has been used to assert a mandate for M4A.
Medicare's Unfunded Liability
Since exactly what M4A
details (where the devil lurks) are less than crystal clear, and even the
best-articulated versions are more like political talking points than complete
plans, backed by questionable, if not provably incorrect assumptions,
the goal is clearly to pass a bill that would be very hard to undo before most
citizens have any clear idea of what is involved.
Consequently, it is
important to remember what most stories hyping the popularity of M4A leave out:
When people were informed it would entail a massive increase in costs and
taxes, support cratered. Given that Sanders’ proposal could
add $3.2 trillion in annual government spending (when America now spends $3.5 trillion annually
on health care), that is easy to understand. However, there is also another
multi-trillion-dollar reason why many who now support M4A might switch sides:
Medicare’s massive unfunded liability.
Medicare provided many with a great deal, but
that deal was the result of dumping an enormous bill on future generations.
As with other Social Security
expansions, when Medicare was created in 1966, those in or near retirement paid
little or no more in taxes but got substantial benefits throughout retirement.
That imposed a large unfunded off-budget liability on later generations. And
every expansion since (most recently, Medicare Part D’s prescription drug
benefit, whose officially estimated unfunded liability at the time was $17 trillion)
has created another free lunch for those older, expanding the huge tab facing
later generations.
The same sort of
conclusions were reached in an Urban Institute study of Medicare, which found
that in 2012, average-earning males were “buying” $180,000 in Medicare benefits
for $61,000, while similarly situated females, with smaller lifetime contributions
and longer life expectancies, did even better.
Optimistic Assumptions
The result, as reported
by Michael Tanner,
was a 2015 forecast of almost $48 trillion of unfunded liabilities under
implausibly optimistic assumptions. A return to higher medical cost inflation
rates could make it $88 trillion. A continuance of lower birthrates than
forecast would push it higher.
So would including future commitments to recipients who have qualified for but
not yet received all their benefits as of the end date of a study.
So why might recognizing
that massive unfunded liability and its continued expansion move Americans into
the “anti-M4A” camp?
Because of the wealth
transfer to early enrollees, as well as from ensuing expansions, Medicare
provided many with a great deal. But that deal was the result of dumping an
enormous bill on future generations (bigger than the unfunded liabilities for
Social Security plus the national debt).
As a result, Medicare was a far worse deal than
M4A salesmen and women admit, and it is now decaying at an increasing rate.
With that bill starting
to arrive, Medicare is not even close to sustainable in its present form, much
less to be leveraged to cover the entire population (although one can
understand the vote-buying potential in promising massive new M4A generational
transfers).
Not only is a massive
expansion of an already far-in-the-hole Medicare program a fool’s errand, but
the massive unfunded liabilities it has built up also mean that the previous
costs were far higher than what recipients paid and continue to be so (even
underestimates of its unfunded liability growth add more than $1 trillion per
year of hidden costs to Medicare).
As a result, Medicare was
a far worse deal than M4A salesmen and women admit, and it is now decaying at
an increasing rate, making its extension to all a 14-digit boondoggle, not a
boon. And doubling (or more) down on the already unpayable burdens Medicare has
laid on future generations also highlights the blatant hypocrisy of backers
who, at the same time, preen about all the new plans they have to “invest in
the future.”
No comments:
Post a Comment