Medicare

Recently John Stossel detailed the history of Medicare and talked about its future. At a time when Congress is considering a major overhaul of medical insurance, it would be instructive to look at the history and the future of the first government-run health care plan, namely Medicare.

President Lyndon Johnson won a landslide victory in 1964. His election brought many like-minded members to Congress willing to establish a medical entitlement program that would benefit the elderly. Since this was a new program and uncharted territory, government officials made their best-case estimates for costs. We now know that these estimates were off (sometimes by orders of magnitude).

To this day, many retirees believe that their Medicare bills are paid from a “trust fund” that was created with deductions from their paychecks. This is not true. Politicians spend the money they receive through these contributions immediately. The money paid to current Medicare recipients comes from the deductions from the paychecks of today’s workers.

John Stossel says: “This Ponzi scheme worked for a while. But then more people had the nerve to live longer.” Essentially, the same demographic reality that has affected Social Security is also hurting Medicare. But that is only part of the problem. Not only are people living longer, but the ratio of workers to recipients is decreasing.

When Medicare began there were five workers for every Medicare recipient. Now there are only four, and soon there will only be three. The Board of Medicare Trustees predicts the ratio will be down to 2.4 by the year 2030. They also point out that Medicare’s unfunded liability is $37 trillion. That’s $37 trillion with a T.

I have been saying for months that we should solve the Medicare problem before we do anything else. There are possible solutions to this problem, but a 1,000 page bill with additional mandates and bureaucracies isn’t one of them. I’m Kerby Anderson, and that’s my point of view.