By Robert Romano
Reforms to Medicare enacted in 1997 to peg the costs of the program to economic growth — the sustainable growth rate — have been repealed easily in the House of Representatives 392 to 37.
These were the same reforms that were the centerpiece of the Balanced Budget Act of 1997 to save the program from what appeared, at the time, to be certain insolvency. After all, that was the year that the Medicare trustees were predicting that the Hospital Insurance Trust Fund would be exhausted by 2001.
The same reforms that were at the heart of two government shutdowns in late 1995 and early 1996. It was all about containing the costs of Medicare.
Well, to quote the immortal words of Gilda Radner’s Emily Litella character from Saturday Night Live, “Never mind.”
The Congressional Budget Office reports that the legislation, which increases payments to doctors and reauthorizes Children’s Health Insurance Program through fiscal year 2017, will add $141 billion to the debt over the next 10 years — and that’s before you even count interest, which could add another $30 billion.
As for the second 10 years, the Committee for a Responsible Federal Budget estimates that the legislation could add another $325 billion or so to the debt by 2035.
That is, if the program even gets that far. In 2014 the trust fund was said to be exhausted in 2030. Since the program adds to the debt, this outcome cannot be good for long-term health of the program.
Although to be fair, the trustees have already baked a repeal of the sustainable growth rate into the cake: “This year’s report (and this Summary) gives primary emphasis to the projected baseline, in which it is assumed that sustainable growth rate reductions are overridden by Congress, as has occurred in every year since 2003.”
Commenting on the legislation, Americans for Limited Government President Rick Manning did not see much changing about the trajectory of the program: “The doc fix conversation that was forced by the sustainable growth rate was a good thing. It created a regular legislative discussion around the expanding costs of Medicare and the threat posed to our nation’s financial security. Now, under this deal, that honest discussion has been traded for a fix that fails to save the program, creates massive amounts of new debt, and locks in some of Obama’s expanded social welfare spending as part of the deal.”
Manning added, “If this Congress was serious about saving the Medicare program, they would institute their reforms right now, which will be no less jarring in 2018 when they finally take effect. This kick-the-can approach guarantees that taxpayers will assume the increased costs of the program, and postpones the pain for a future Congress to deal with.”
Meaning the program won’t do a thing to save the trust fund. The only consolation is that Congress is broadcasting what it intends to do when it is finally exhausted.
The trustees warn that when the fund runs out, “dedicated revenues will be sufficient to pay 85 percent of … costs. The Trustees project that the share of … cost that can be financed with … dedicated revenues will decline slowly to 75 percent in 2047, and will then stay about flat.”
Right away, Medicare beneficiaries and the doctors who collect would be looking at a 15 percent cut, increasing to a 25 percent cut in the years thereafter.
But won’t that just be another “unsustainable cut” — a term used by the Republican-controlled House Ways and Means Committee to describe the sustainable growth rate — to benefits and doctor pay?
So what will Congress do when it comes time for the cuts? They’ll just borrow it. And whatever cannot be borrowed publicly, the Federal Reserve will pick up the tab.
That’s right. Just ignore the trust fund. After all, that’s what Congress does. And with that in mind, since they’re just going to borrow and print the money for the benefits anyway, why not just let young people keep their FICA tax and just opt out altogether?
After all, it’s not like we ever have to pay that debt back, right? If Congress does not think it needs to pay for Medicare, why should taxpayers? Just saying.
Robert Romano is the senior editor of Americans for Limited Government.
Source: GetLiberty.org News Release
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