Just in Time for the Health Reform Debate…
… comes a report (pdf) that finds Medicare’s hospital fund will go broke sometime in 2017 — two years earlier than analysts reported just a year ago. The projections for Social Security are much better, with the trust fund for the elderly expected to dry up in 2037.
Not that any of this comes as a surprise. Congress has faced the looming Medicare crunch for years, only to punt any major reforms to another day. This year, though, might be different. President Obama has made comprehensive health care reform a top priority, and he’s putting heaps of political capital toward the cause. Indeed, everyone from Sen. Charles Grassley (R-Iowa) to the American Association of Retired Persons is tossing out press releases right now pointing to the new Medicare insolvency numbers as a rallying cry for a sweeping health care overhaul in 2009.
Medicare’s accelerating insolvency is largely a result of two problems — an economic recession that is increasing demand on public health programs while lowering revenues, and skyrocketing costs throughout the health care system — that will only be fixed by comprehensive reform in 2009.
And here’s Grassley:
Kicking the can down the road isn’t an option anymore because we’re at the end of the road. Necessary policy reforms to add efficiency and improve Medicare’s fiscal health without cutting benefits will take time to implement. If Congress waits, the savings from those changes won’t materialize until after the program becomes insolvent. At that point, the only options would be cutting provider payments, reducing benefits, or raising payroll taxes.
Doing these things, though, will be a Herculean task. Americans are projected to spend $2.6 trillion on health care this year — a figure that’s projected to grow at a much quicker clip than the rest of the economy in the coming decade. And despite a recent pledge from some of the largest medical industries to trim their costs, there’s not a player in the health delivery system that really wants to take a pay cut. On top of everything else, the short term expense to overhaul the health care system will be tremendous. Even if those changes are made in the name of long-term savings and stability, they could be a tough sell among lawmakers who’ve already got a bitter taste after allocating hundreds of billions of (borrowed) dollars to prop up the ailing economy.
Whoever said it’s good to be the king wasn’t in Obama’s shoes.