Christopher Holt October 30, 2020
Earlier this year, the Medicare Trustees reported,
for the second year in a row, that Medicare’s Hospital Insurance Trust Fund
(Part A) will become insolvent in 2026. More recently, the Congressional Budget
Office (CBO) projected that
the economic contraction instigated by the COVID-19 pandemic has accelerated
the timeframe, and Medicare Part A will reach insolvency by 2024. If
corrective action is going to be taken to shore up the Medicare program, it
will need to happen on the watch of whoever wins next week’s election. Joe
Biden may be particularly well positioned to address this problem, but his
calls for lowering the Medicare eligibility age from 65 to 60 suggest he’s not
inclined to take on the challenge.
While Congress and the next administration will
have to act in the next four years, this reckoning has been long coming. Apart
from 1966 and 1974, Medicare has spent more on benefits than it has taken in
through premiums and payroll taxes every year of its existence. Medicare’s
cumulative cash shortfall since enactment is $5.5 trillion, and its shortfall
in 2019 was 40 percent of the overall deficit. While the problem is
mounting, President Trump has been explicit since announcing his 2016
campaign that he will not undertake any changes to the Medicare program aimed
at shoring up its finances.
A theoretical President Biden, however, might be
uniquely positioned to lead Medicare reform efforts. It seems almost
certain that Biden would not seek a second term as president if he prevails
next week. Turning 78 a few weeks after the election, Mr. Biden will
already be by far our oldest incoming president. And the former vice president
has promoted himself as a transitional figure, providing stability and a return
to norms while paving the way for a new generation of Democratic political
leaders. Biden would not have the pressure of facing primary or
general-election voters again, nor given his relative age and financial
situation would he need to be particularly worried about post-presidential
employment. Hard choices—in the form of benefit changes, increased revenue, or
more likely both—will need to be made no matter how policymakers choose to
address Medicare’s financing, and it’s likely that both ends of the political
spectrum would be unhappy with any compromise that addresses the
challenge. Similar to the way John Boehner sought to “clear the decks” of
controversial issues facing Congress before handing over the Speaker’s gavel to
Paul Ryan, Biden could see his role as taking the hits to protect the next
round of Democratic leaders from having to make those hard choices on
entitlements. In effect, addressing long-term entitlement financing could
be an “only Nixon could go to China” moment for Biden if he wanted it.
Unfortunately, candidate Biden has shown no
inclination to face reality when it comes to Medicare. At a time when some
have called for increasing the Medicare eligibility age to account for both
increasing lifespans and the program’s increasing costs, Biden is promising to
lower the Medicare eligibility age to 60. Lowering the Medicare age is
consistent with Biden’s focus, and that of Democrats broadly, on increasing
insurance coverage rather than reducing health care costs. Ironically, however,
lowering the Medicare age is unlikely to do much to reduce the number of
uninsured. Of the 22.7 million people
who would be newly eligible for Medicare under Biden’s proposal, only 1.7
million are currently uninsured. Almost all of the increase in the Medicare
population would come from people shifting from other types of coverage. In
addition to driving up Medicare costs and accelerating Part A insolvency,
moving people from private insurance coverage to Medicare will impact health
care providers who are paid less by Medicare.
Whoever wins next week’s election, the game of
entitlement-spending hot potato is going to end on his watch. President
Trump, the self-proclaimed King of Debt, has given every indication he’ll
ignore the problem by just taking on more debt. A President Biden would
have an opportunity to rise to the challenge, but so far he appears inclined to
follow Trump’s lead, with a little more spending tacked on while he’s at it.
WORTH
A LOOK
FierceHealthcare: Trump administration finalizes rule
forcing payers to post negotiated rates, cost-sharing data
New York Times: Death Rates Have Dropped for Seriously
Ill Covid Patients
Disclaimer
https://www.americanactionforum.org/weekly-checkup/would-a-president-biden-fix-medicares-cash-shortfall/#ixzz6ck6PJNKr
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