Friday, July 27, 2012

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.

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