$43 trillion is the total sum of our government’s future Medicare and Social Security obligations over and above its current ability pay. This represents an unimaginable load on future generations of Americans. Without action within the next few years overhauling both commitment programs, the burden of supporting these programs amidst spiraling debt will fall directly onto the workers of the future — you and me!
As baby boomers begin to rely more heavily on Medicare, the number of enrollees is projected to increase by 75 percent. Rather than being prepared for this inevitability, Medicare has been left in arguably the greatest financial crunch since its inception. Earlier this year, the Medicare and Social Security Board of Trustees rang the alarm bells once more.
For the second year in a row, Medicare is projected to run on general tax revenue to cover 45 percent of its costs within the next seven years. By 2014, Medicare will be on financial life support, siphoning more and more money away from the general fund — and squeezing other critical government services. The coffers of the Hospital Insurance Trust Fund are projected to be empty by 2019. Medicare needs more reform than the bureaucratic, lobbyist-edited 2003 attempt in order to be sustainable.
No doubt, Medicare has grown more inefficient as it has been tasked to support more people. Currently, about six percent of Medicare’s beneficiaries account for 55 percent of the program’s expenditures. HMOs and private insurance reap the benefits of a projected $83 billion in overpayments over the next eight years, while Medicare equipment fraud runs rampant.
The program cannot afford to act like a blank check, not if it hopes to be effective in the long-term future. It needs oversight, and it needs to cut out the middlemen robbing America blind. At the same time, the extent of the program’s financial troubles and the size of the baby boomer population will mandate some sort of tax increase in order for us to be able to provide health care for the elderly the way we do today. Those who believe we can pay for Medicare without taxes do not understand the depth of Medicare’s financial hole and the economics of geriatric healthcare.
Social Security, while perhaps somewhat less pressing of an issue, is also in need of significant reform. The projected worker-to-beneficiary ratio upon baby boomer retirement is projected at about 2 to 1; this ratio in 1945 was 42:1.
We have fewer workers supporting more retirees, but almost all of Washington — including Senators Obama and McCain — assure us that we need not fear about the need to raise taxes or cuts benefits in order to save Social Security. On the bright side, the projected “bust date” of Social Security is only around 2041 — several decades should be plenty of time to pull a few trillion dollars out of the air.
The Board of Trustees for both programs, which includes individuals like Treasury Secretary Henry Paulson, has stated that “there is no provision in current law that would enable full payment of benefits.” The Government Accountability Office released a report in 2007 states bluntly that our federal entitlement programs as they are will drag the US into more of a fiscal quagmire than the one we currently face.
We as a society collectively grimace at the mention of taxation, hoping that there are magic solutions to our fiscal crises. However, we much come to grips with the fact that there is no such silver bullet for these massive problems. We must force our representatives in Congress to work to enact pragmatic solutions rather than continuing to ignore the issue.
The longer we dance around Social Security and Medicare, the more money we waste accomplishing nothing. I should hope that we all want affordable health care and a secure retirement. If Social Security and Medicare turn out to not be the way to get there, then perhaps, heaven forbid, one or both of these Depression-era programs need to be reconsidered or entirely revamped.
Senator Obama’s plans to help provide coverage for those under 65 are a step in the right direction, but it would cost money. Senator McCain, on the other hand, thinks that by having Warren Buffett pay for his pills and treating doctors like criminals, we can keep Medicare afloat.
Either way, I’m tired of politicians who don’t touch the subject with a ten foot pole simply because a certain large demographic might feel threatened, and I’m tired of an electorate that won’t just clench their jaws and pay for programs to help the general public. The longer we wait, though, the more money we funnel away from other parts of government that really need it. Personally, I dread the thought of choosing between my between my child’s education and my parents’ health care — but the money must come from somewhere, and we’re better off paying for it now than pushing off the responsibility to yet another generation.
Karan Sagar is a member of the Class of 2012.