Medicare Is Insolvent, And Getting Worse. Here Are 3 Ways To Start Fixing ItEnacting several modest reforms to Medicare—ones that could attract Democrat support—could rebuild a bipartisan consensus to tackle the unsustainable nature of our entitlements.Christopher JacobsBy Christopher Jacobs
JULY 6, 2021Most conservatives recognize the federal government faces enormous fiscal problems—both a large overhang of debt from spending in years past, and sizable deficits forecast for the years to come. But what to do about it?
While spending on things like earmarks and Congress’s failure to right-size spending when passing tax relief have worsened our fiscal woes, at bottom the United States’ financial shortfalls stem from unsustainable entitlements: Obamacare, Medicaid, Social Security, and Medicare. These programs comprise a large, and growing, share of the federal budget, particularly as the Baby Boom generation retires.
In the immediate future, President Joe Biden and his Democrat colleagues in Congress will likely thwart any major attempt to right-size our entitlement programs, until Washington finally re-learns the habit of spending within its means. But that doesn’t mean conservative lawmakers should sit back, do nothing, and watch the situation get worse.
Enacting several modest reforms to Medicare—ones that could attract Democrat support—could rebuild a bipartisan consensus to tackle the unsustainable nature of our entitlements. It would hopefully build momentum towards the bigger reforms that Medicare needs to remain solvent for future generations of Americans.
The Problems On the macro level, the federal government as of the end of the fiscal year this September will hold $23 trillion in debt—roughly equal to the size of our current economy. According to the Congressional Budget Office, the national debt has roughly tripled since 2007 and is projected to rise such that, by the end of the coming decade, Washington will spend nearly $1 trillion per year just to pay the interest on our bills.
Medicare itself has been effectively insolvent for several years. In 2009, the last year before Obamacare’s enactment, the program’s trustees concluded the Medicare Hospital Insurance Trust Fund would become insolvent by 2017, i.e., four years ago.
Obamacare changed that dynamic—but only on paper. Democrats used government accounting practices to claim that the Medicare spending reductions and Medicare tax increases in Obamacare both improved Medicare’s solvency while paying for the new health-care law. In reality, however, you can’t spend the same money twice—meaning this double-counting made Medicare appear more solvent on paper alone.
Obamacare’s financial gimmicks allowed lawmakers to avoid dealing with Medicare’s problems for most of the past decade. But now even those gimmicks have run their course. Estimates suggest the Medicare trust fund will become officially insolvent within five years—and could face a cash flow crunch even sooner.
That’s where the need for solutions comes in. To be clear: Republicans can—and should—explore more comprehensive Medicare reforms, including a premium support program that would place private plans and traditional Medicare on a level playing field to attract and enroll seniors. But because Democrats would likely object to these solutions for ideological reasons, other, smaller changes in the meantime could set the stage for larger reforms in 2025 under a Republican president.
Solution 1: Medicare Opt-Out<..snip..>
https://thefederalist.com/2021/07/06/medicare-is-insolvent-and-getting-worse-here-are-3-ways-to-start-fixing-it/
