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The Bleak Future of Medicare

November 27, 2011

Now that the “supercommittee” of Congress has failed to reach a compromise to restore some fiscal sanity to our national debt, let us consider for a moment what a monumental failure of leadership this waste of time turned out to be.

For starters, their task was to reduce the federal deficit by $1.2 trillion over 10 years, which according to my simplistic math works out to be about $120 billion per year. Once again the media contributed to Washington spin by allowing the talking heads to play loose with the denominator (over 10 years vs. per year). This $1.2 trillion figure is chump change compared to our current annual deficit of $1.4 trillion EACH YEAR. The bozos couldn’t even work out a deal to reduce the current deficit by 10%.

In the background of this nonsense is the stark reality that the baby boomers are just entering the Medicare and Social Security pools. Just the hospital portion of Medicare (Part A) is expected to grow from 3.6% of the GDP now to 5.2% of the GDP in 2030, according to a report of the Medicare trustees earlier this year. This assumes there is no fundamental change in how the program works.

How do we pay for this? An analysis by the Congressional Budget Office suggested that if Medicare costs increased by just 1% per year over GDP growth, income taxes would have to be raised 70% to cover the increased costs over the next 10 years. This is bad enough, but 1% is probably wishful thinking if no fundamental changes are made to Medicare. For the last 50 years the average healthcare inflation rate has been 2.5% over GPD growth, which would require a 160% increase in income taxes. Or we could keep doing what we’ve always done and just dump our national credit card debt on the backs of our children and grandchildren.

And while all these projections were being calculated and disseminated, Medicare elected to cover the new drug for metastatic prostate cancer, which increased life expectancy in its big study from 22 to 26 months at a cost of $93,000 just for the drug. This will add roughly $7 billion more per year to out national debt. I understand that legally the CMS folks were pretty much forced to approve the drug, but taking the broader view, this decision was insane. We’re going the wrong direction.

Sorry to be a wet blanket. I had hoped I could write an uplifting thankful message this season. But our children’s futures depend not on us sharing delusional uplifting platitudes with each other, but facing reality and making some difficult decisions. I am not thankful that our leaders can’t get the job done. They’re not even close.

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One Response to The Bleak Future of Medicare

  1. Christopher Gregory on November 27, 2011 at 8:13 pm

    I guess if there is a fundamental flaw in your commentary, it is the same flaw that many reasoned thinkers have engaged in, i.e., wasting the time performing an intellectual autopsy on a failed system of government which has slaved itself to the agendas of the special interests. When are we going to jolt ourselves into the realization that politics has sold our national soul to the devil of the government industrial medical coalition, as well as the universe of the other special interests associated with wealth privilege(s)? We might as well concede right now that our children will be the guaranteed perpetual bearers of our economic guilt – UNLESS WE FIND A WAY TO CORRECT OUR GLUTTONY FOR WEALTH AT THE EXPENSE OF AN OVERFATTED HEALTH CARE SYSTEM FOR A START. Can a nation of sheep do that?

    How many wake up calls do we need, how many time do we need to get hit over the collective American head with a baseball bat before we realize that we need to quit the waste? Has anyone ever paid heed to the IOM’s announcement that one third of our 2.5 trillion annual health budget is pure waste???

    We have the tools. If we want free market solutions, we have in our grasp the private sector initiatives to start to turn the tide of American health care greed into an intelligent exhibition of prudent management of costs that improve the qualities of our lives without bankrupting out nation. You know what I am addressing, and you know that we have conceded that our worst angels are guiding our egos in the wrong direction. Will no one step up to the plate on behalf of a bankrupting nation and stop the hemorrhaging of our vital health care dollars? Does no one have the intestinal fortitude to say “enough”, “we can do better!!”? Or is there nothing left for us to do except expound on the unfolding economic death sentence coming at us?

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