Robert Romano, the Americans for Limited Government Senior Editor, has written a good article on Medicare and the Public Option and on taxes and health care rationing. It is called Washington's Degenerate Elite. It tells a story of complete fiscal irresponsibility and of upcoming drastic health care rationing necessitated by biting off more than the government can chew on top of already legislated massive revenue shortfalls. Even so, Romano does not make a critical part of the problem clear because he allows the government to get away with one of its most irresponsible ruses. Let's follow his argument and his tale of the numbers and I will point out where the situation gets still more awful and to use his term, still more degenerate.
The Medicare Board of Trustees says Medicare has $2.5 trillion of assets in 2009. Under a worst case scenario, its assets reach a maximum in 2012 of $2.712 trillion. The program starts operating at a deficit thereafter. In 2019, assets will be down to $2.279 trillion after accumulated losses of $433 billion. Every year after 2012, losses will average about $169 billion per year. In 2028, Medicare assets will be zero.
Now this is bad, but it is actually much worse than this. What are these assets? Well, they are just IOUs written to the program by the government. To make these IOUs good, the government has to increase taxes or greatly decrease its expenditures elsewhere. Obama and the Democrat Congress have no intention of generally decreasing spending by enough elsewhere, so taxes will have to go up greatly. The above paragraph makes it seem as though the increased taxes to continue to fund Medicare must go up when the Medicare assets are gone in 2028. This is not at all the case. They will have to go up in 2013 and thereafter in order to cover the average shortfall in Medicare taxes of $169 billion per year! This is the same year that ObamaCare is supposed to start. So, the degenerates Obama, Pelosi, and Reid plan to add a new huge spending program the same year that the Medicare program starts operating at a loss. Brilliant!!!! These wily, sly socialists are counting on few of the People recognizing this in 2009, which is another of many reasons why they wish to pass this legislation through the Senate this year.
Romano continues with the story. The Public Option of Obama, Pelosi, and Reid will initially cover about 36 to 45 million people. The number of covered people is expected to increase with time. According to the Center for Medicare & Medicaid Services, the cost of the Public Option will be an additional $935 billion by 2019. How do our degenerate socialists plan to pay for this? Well, they plan to ration care under Medicare to the extent that they will reduce its costs by $427 billion by 2019. Note that with no changes of law, we were going to have a deficit of $433 billion by 2019 in Medicare, so these cuts in Medicare, if made, would leave a net deficit of $6 billion in Medicare without the Public Option added expense. With the Public Option added expense, new taxes are required and Obama and his socialist cadres propose new taxes of $574 billion to be collected by 2019. This leaves a combined Public Option and Medicare deficit of $367 billion in 2019. Actually, the deficit will be greater since tax increases do not bring in as much revenue as projected and government plans to cut expenses never reach their goals.
The situation gets worse with time. The Public Option is initially funded by taxes that go up before the program starts, but which will actually be used to pay the government deficits already in place (Stimulus Bill and other expensive programs). Consequently, when the Public Option starts spending money, it will also have to convert IOUs into spendable money, which in practice means that either the deficits will be larger at an earlier time than projected or taxes will have to go up still more. But in the government's ruse, IOUs are gold in the bank and the Public Option debt is only $32 billion in 2017, $59 billion in 2018, and $108 billion in 2019. By 2030, the deficit from this one program would be more than $1 trillion. This is based on a number of people covered which many reviewers think is lower than will actually be the case.
The combined costs of Medicare, Medicaid, and the Public Option will soon be greater than $1 trillion per year. The costs will be increasing every year, which will require severe cuts in health care coupled with severe increases in taxes. The rich will not be able to bear the cost of these taxes, so Obama's pledge to not raise taxes on the middle class will be meaningless, though that has already become very clear in other contexts.
All of the projections on expenses above were made on older June estimates and on very favorable assumptions. The Center for Medicare & Medicaid Services now says those June estimates are much too low. The cost of health care will increase fast enough that the deficit in the Pelosi House Public Option plan will be $289 billion greater than the numbers discussed above by 2019. How much greater will they be in the outlying years? Based on past government health care programs, one has to assume they will be many times higher than the costs now projected.
As Romano points out, things get still worse. PriceWaterhouseCooper says the cost of private insurance will be driven upward sharply by ObamaCare. An insurance plan that now costs $4,700 will cost $9,917 by 2019 or 2.1 times more than now. The cost increases for the young will be even larger factors. Many individuals who are now privately insured will be driven onto the Public Option, raising its costs many times. When the Public Option is the last resort, it will also be bankrupt!
This Public Option plan simply makes the already intractable problems with Medicare, Medicaid, and Social Security much worse. It is utter insanity to add to this existing problem with the Public Option.
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