47 Years Later, Medicare and Medicaid Are Financial
Disasters
This Monday, July 30, 2012 will mark the 47th
anniversary of the enactment of Medicare and Medicaid. On that day in
1965, President Lyndon Johnson journeyed to Independence, Missouri to sign the
enabling legislation in the presence of former President Harry Truman. It was
the dawn of "The Great Society" and the American nanny state.
Financially, it's been downhill ever since.
Medicare was designed to provide medical
services to those over the age of 65. Medicaid was designed to provide
financial assistance to the poorest among us who can't otherwise afford medical
services. From the inception of these programs, fraud, abuse, and mismanagement
have dominated their operation.
With the aging of the
population, prospects for the financial future of Medicare are ominous. As
President Obama's second cousin, Dr. Milton Wolf, a radiologist who adamantly
opposes his cousin's anti-free market policies, wrote in the Washington Times:
President Lyndon B. Johnson promised that
Medicare would cost about $500 million a year - yes, million. He even said that
if costs went higher, then he was going to look like the “worst kind of damn
fool.” Just a year later, in 1966, the House Ways and Means Committee estimated
that Medicare would cost about $12 billion a year by 1990. The actual 1990 cost
was $107 billion - off by an order of magnitude but close enough for government
work. And that’s when costs really took off. By 2008, annual costs hit $599
billion and the program for the first time went into deficit-spending mode.
For all the Democrats’ dishonesty and reckless
spending, Republicans weren’t exactly blameless either. In 2003, President
George W. Bush and a Republican Congress doubled down and ushered in the
largest expansion in Medicare history with their senior citizen prescription
drug entitlement program. They claimed the price tag would be $400 billion for
the first decade but quietly adjusted that estimate upward to $534 billion just
one month after passage...
Today we know that LBJ and a lot of other
politicians indeed are the worst kind of damn fools. Medicare - like Social
Security - is collapsing under its own weight and threatens to take America
with it. The Medicare Trustees declared last month that Medicare Part A
(Hospital Insurance Trust Fund) will be insolvent by 2024, a mere 13 years from
now. Others estimate it will be only nine years. The entitlement program has
racked up almost $25 trillion in unfunded liabilities. Others say it’s actually
$38 trillion. It turns out free health care is pretty expensive.
Despite Democrats’ breathless claims that
private insurance companies are the enemy, it is our federal government that is
the largest denier of medical claims in the world. And that’s before the
president unleashes his rationing board, the Independent Payment Advisory Board
(IPAB) or so-called “death panel.” And if that wasn’t enough, the Democrats
have plundered $1.9 trillion from Medicare over the next decade ($8.2 trillion
over 20 years) to fund Obamacare and have all but destroyed the popular
Medicare Advantage program. Make no mistake: Obamacare is killing Medicare.
The financial picture
for Medicaid is even more bleak. As Breitbart's William Bigelowpointed out yesterday, 47 years later
"the 2010 Actuarial Report on the Financial Outlook
for Medicaid for Obama’s Health and Human Services department
admits" that Medicaid expenses will continue to spiral out of
control, with no end in sight.
From program inception, the cost of Medicaid
has generally increased at a significantly faster pace than the U.S. economy.
In 1970, combined Federal and State expenditures for Medicaid represented 0.4
percent of gross domestic product (GDP), but this percentage grew to 0.9
percent in 1980, 1.2 percent in 1990, 2.0 percent in 2000, and 2.7 percent in
2009. As illustrated by the actuarial projections in this report, Medicaid
costs will almost certainly continue to increase as a share of GDP in the
future under current law.
And Obamcare, the report admits, will
make it worse:
The Patient Protection and Affordable Care
Act, as amended by the Health Care and Education Reconciliation Act of 2010,
will substantially reduce the number of people in the U.S. without health insurance.
Much of this reduction will occur as a result of expanded eligibility criteria
for Medicaid, which we estimate will increase the number of Medicaid enrollees
by about 20 million in 2019. Medicaid provides a relatively low-cost way to
increase the number of people with health coverage, since its payment rates for
health care services and health plans are low compared to other forms of health
insurance. Even so, aggregate Medicaid costs will increase significantly as a
result of the Affordable Care Act, due to the very large number of additional
enrollees starting in 2014.
Dr. Milton Wolf paints a clear eyed picture of
how medical professionals see the future of Medicare under the Affordable Care
Act:
In the few remaining years Medicare has left,
dispirited doctors are already fleeing the program in droves – and
medicine altogether – leaving behind helpless patients. Democrats’ only
plan is to maintain the crumbling status quo: Plunder Medicare, chase more
doctors away with an additional 30 percent cut in reimbursement next year, and
then watch from the bleachers as Americans are turned into medical refugees
desperate for any salvation.
The president’s intentions are chillingly
clear: “I happen to be a proponent of a single payer universal health care program.
… That’s what I’d like to see.” Obamacare is a major step in that direction. “I
don’t think we’re going to be able to eliminate employer coverage immediately,”
he says, but he can envision it “a decade out, or 15 years out, or 20 years
out.”
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