Free Markets, Free People

Medicare Buy In: Worst. Idea. Ever.

What in the world are the Senate Democrats thinking?  Isn’t this supposed to be about “health care reform”?  Apparently their idea of reform is to take a system that has trillions of dollars in unfunded liabilities and expand it without ever addressing the underlying reason for the huge future debt?

Brilliant.  Just brilliant.

But apparently winning the process (passing something called “health care reform”) has become more important than the original purpose of “reform”.

This is just a stunningly bad idea, but one that seems to be generating some “enthusiasm” among Democrats and “progressives”:

Now, it appears, negotiators are making headway to ensure that the [Medicare] expansion would take place at a far quicker pace than any proposed public option. According to the well-placed source, Democrats are rallying behind a proposal that would allow a portion of the 55-64 year old age group to buy in to the Medicare system as early as 2010. By contrast, a public plan for insurance coverage would not come into being until 2014.

That group which would get immediate access, of course, would the the high-risk group that will cost the most to treat.

In addition to debating a potential start date for a Medicare buy-in proposal, Senate Democrats are also in negotiations over who, exactly, should be allowed to qualify for the expanded Medicare program. At this juncture, it doesn’t appear that everyone in the 55-64-age bracket would be granted access. Negotiators are considering limiting consumers to those who would qualify for high-risk insurance pools already set up under the Senate’s health care legislation. This would mean primarily those who have been uninsured for a certain amount of time, have a history of poor health or are unable to get insurance because of a preexisting condition. The Senate has already earmarked $5 billion for subsidies for this group to buy insurance and may increase that total to help them pay for Medicare coverage — should it become available to those under 65 and above 55 years of age.

Note that the subsidy is only to help this group buy insurance coverage under Medicare. It says nothing about the cost of that pool to Medicare. And, don’t forget, they’re cutting Medicare payments by $500 billion over then next 10 years.

Then, in 2014, they’re going to bring in the rest of that age group in total. And they’re going to tell you this will save money and “reform” health care?

What a load of horse apples. A little reminder for those who seem unable to remember or remain willfully ignorant:

According to the Medicare Trustees:

* Medicare’s expected future obligations exceeded premiums and dedicated taxes by $89 trillion.
* In other words, Medicare’s liability is about 5 1/2 times the size of Social Security’s ($18 trillion) and about six times the size of the entire U.S. economy.
* Throw in Medicaid, and health care spending alone will crowd out every other thing the federal government is doing by mid-century, says Goodman.

Yet to date, other than a claim they’re going to cut that $500 billion out of it – a claim I’d be willing to bet never happens – there is no recognition of the huge unfunded liability nor the fact that these additions they’re “negotiating” will simply swell it even more.

What does that mean to those starting to build a life for themselves now? Well, it isn’t pretty:

Future Payroll Tax Burdens. Currently, a 12.4 percent payroll tax on wages funds Social Se­curity and a 2.9 percent payroll tax funds Medicare Part A (Hospital Insurance). But if payroll tax rates rise to meet unfunded obligations:

* When today’s college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today’s rate.
* When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent – more than one of every four dollars workers will earn that year.
* If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 – one in three dollars of taxable payroll, and twice the size of today’s payroll tax burden!

Thus, more than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law. That is before any bridges or highways are built and before any teachers’ or police officers’ salaries are paid.

That’s also before this latest hare-brained idea by the Democrats (adding another entire decade’s worth of people to Medicare).

Look, you don’t have to be a Harvard PhD to figure this out (in fact, it appears it’s better if you’re not). We are being again sold further down an unsustainable river by a bunch of yahoos who seemingly have no cognizance of the detrimental future impact of what they’re proposing.

Between the promises they’ve made with Social Security and Medicare/Medicaid, we’ll be broke before you know it:

* By 2020, in addition to payroll taxes and premiums, Social Security and Medicare will require more than one in four federal income tax dollars.
* By 2030, about the midpoint of the baby boomer retirement years, the programs will require nearly half of all income tax dollars.
* By 2060, they will require nearly three out of four income tax dollars.

And instead of fixing this, they’re now talking about adding to it and making it worse? If you need a picture (this is primarily for those Harvard PhDs who can’t seem to wrap their heads around the nonsense that’s being proposed) here you go:


This is the mess the Democrats are “enthusiastic” about adding on too with trillions more in unfunded liabilities without addressing the necessary reform to “bend the cost curve down”. It is, in the truest sense, generational theft. It is unacceptable. It is obviously unaffordable and, unfortunately, they don’t seem smart enough to realize that.

This is an outrage and they need to know that they are so far afield on this that they’ve lost site of the goal – reform which makes health care more affordable. This monstrosity just gets more expensive as they “negotiate”.

Just kill it.


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8 Responses to Medicare Buy In: Worst. Idea. Ever.

  • Besides tort reform, the one subject that seems to have fallen through the cracks is capacity of the system.
    There is nothing here to add doctors at a rate that will cover demand .. and this is before many of the current doctors retire early when they are given the option of “slave labor” or retirement. Officially adding 20 to 30 million Americans, who previously only went to an emergency room in dire conditions, to the normal doctors’ roles is going to make it bad for everyone.
    Also missing is anything to cover the “displaced” workers. Insurance and other medical workers will have to be displaced when the feds effectively cap the amount of money going into the system. Call them “waste, fraud and abuse” if it makes you feel better, but these folks are still displaced.

    • Your points are well taken. Even now physician’s offices are packed to over flowing. When the physicians face the possibility of paying out of pocket for the priveledge of working twenty hours a day, they may reconsider just how much they enjoy being a doctor. I already know several who have opted out. One owns several fast food franchise locations, and another manages a garbage dump.

  • “This is an outrage and they need to know that they are so far afield on this that they’ve lost site of the goal – reform which makes health care more affordable. ”

    That may be your goal.  But it was never theirs.  Their only goal is control, control, control. 
    Their goal also may be to force the US into bankruptcy and that will mean that they can start over again fresh with no debt (only thing is noone will lend us money).

  • DC is its own little bubble: the people inside it (members of Congress, staffers, media) have no contact with the real world, and so they lose the ability to process information in what most of us would consider a common sense manner.  For example, most of us know that spending more money when you’re already broke isn’t a smart thing.  Most of us know that the same number of doctors can’t see more patients without eventually sacrificing losing quality of care.  Most of us know that you can’t spend less money here only to spend more over there and pat yourself on the back for “saving money”.  Most of us know that the government seldom (if ever) does anything in an efficient, effective manner.  Most of us would never agree to a huge contract that we ADMIT we’ve not read.

    Not so in Washington.  These things are perfectly normal there.

    Those yahoos have been playing the game for so long that it’s BECOME a game to them, something to be done NOT for what good it will do for the people, but rather to score points, to WIN.  And, since there’s no real rulebook and certainly not much chance of being held accountable, why shouldn’t they play dirty?  If that means lying or cheating, then that’s OK.  They know that, no matter what happens, they won’t have to pay the penalties.

  • You know, at some point, we will welcome the Chinese to come over and tell us that we cannot do this stuff. Just like Japanese politicians used the excuse of American pressure when opening their markets or doing reforms, we may to need some external heavy to let the Pols have an excuse…”We want to have free healthcare, but China says we have to work off some debt first.”