Let’s start with some facts. Under the Ryan plan for Medicare unless we manage to control the rate of increase in health care costs, in the future those on Medicare (not anyone now on Medicare or over age 55) will pay more out of pocket and the federal government’s share of the cost will be limited in its growth. In other words, there is an attempt to slow the growth in the federal debt for the benefit of all Americans while possibly requiring some seniors to pay more depending on the coverage they select.
While pundits like this guy are already railing against the plan and insurance companies, they offer no viable alternative. Of course, the concept could be made simple, just leave Medicare as is and limit the rate of growth in the government’s contribution and the rest goes to beneficiaries to pay … same result.
Fact two: a disproportionate percentage of our Country’s resources go to senior citizens in the form of Social Security, Medicare and other benefits for older Americans. This tremendous drain on our economy has and will continue to have adverse affects on younger Americans and their families. Something has to give, as desirable and simplistic the idea may sound the 1% or even the 5% cannot support the rest of the population.
To get an accurate assessment of our current situation take a look at the Purple Plans (meaning bi-partisan) linked to this blog. They were prepared by Prof Larry Kotlikoff an economist at Boston University. Note especially the “generational imbalance plan.”
Fact three: no viable alternative to a radical approach to controlling Medicare’s costs has to date been put forward. Obamacare has scores of projects aimed at that goal, some may help others may not, but even if they all succeed they don’t solve the problem and in the process create more cost shifting to the private sector. Obamacare sets up the Independent Payment Advisory Board (absurdly and incorrectly labeled the “death panel” by no nothing’s on the extreme right) to recommend changes in Medicare if costs cross a certain level. However, the Board is so limited in what it can recommend as to be ineffectual other than cutting payments to health care providers.
Fact four: to solve the problems of Medicare and Social Security all Americans need to pay more or get less or both. Should we tax young families more to benefit those of us who had a lifetime to prepare for old age? Should we ask seniors to pay more of their health care costs? Who deserves more government support, if any, the family of four earning $40,000 a year or the couple in their seventies earning $30,000 (much of which is tax free)?
The key to success here is not figuring out where to shift costs as both the Ryan plan and Obamacare do, but rather to find a way to see the growth in health care costs aligned with general inflation and at the same time change the American attitude that health care expenses are somehow not like any other life expense.
Health care is not “free” and it cannot be paid by someone else all the time. Virtually every American makes choices in how they spend what money they have. Routine care (not catastrophic care) needs to be part of that mix. Until we are of that mindset health care costs will consume an ever increasing portion of our resources in the form of insurance premiums, taxes or as part of our compensation.
The Ryan plan may seem radical, even harsh but it is a reflection of the hard choices we face and should not push to the next generation. Politicians who claim we can avoid the harsh reality are treating us as fools.
QUINNSCOMMENTARY 
David Burge – Iowahawk – The issue is the spending trajectory. The math aspect of the problem: On this a friend wrote –
And, math tells you that our budget deficit cannot be addressed by taxing. Anyone intending to argue tax revenues has to source from IRS Statistics on Income. Table 1.1 under Individual Statistical Tables is a good place to start.
So, using 2008 numbers, we find total taxable income was $5,488 billion. Of that total, taxable incomes in excess of $100,000 totaled $1,582 billion. Taxable incomes in excess of $200,000 totaled $1,185 billion. Continuing, we find the following: over $500,000 totals $820 billion, over $1 million totals $616 billion, over $2 million totals $460 billion, over $5 million totals $302 billion, and over $10 million totals $212 billion.
With this data in hand, we can look at ways to address the deficit with millionaires taxes (without even getting to national debt or the fact that the highest corporate tax rates on the planet have been driving business and taxes offshore). You point with some pride to the Clinton era. Okay, so let’s re-install the Clinton rates on taxable incomes over $200,000, thereby raising rates by 5 percent. If the numbers remained static (and incomes did not decline as the data says they will), then the US has $60 billion in additional revenue. Move from the Clinton rates on taxable incomes in excess of $200,000 and impose rates of 45% on incomes over $1 million (another 5 percentage point increase), assume static yield, and you find that tax revenues would increase by another $31 billion. Raise rates on taxable incomes over $2 million to 70%, and (again assuming static incomes) the Treasury receives another $330 billion in revenue. These are effective rates of tax far in excess of anything seen in the post war era, and certainly far in excess of the so-called glory days of the Clinton Administration. Take every dime of income from those making more than $200,000, this raises $1.185 trillion (assuming everything remains static, which it clearly will not in such a scenario).
The Clinton rates imposed on everyone making more than $200,000 in taxable income yields $60 billion against a current deficit of $1,413 billion in 2009 and $1,293 billion in 2010, and using optimistic White House estimates, $1,645 billion in 2011. Think of it, expropriating all taxable income over $200,000 leaves a budget deficit this year of $460 billion.
That’s the enormity of the problem that is facing us. So what I propose is spending cuts – across the board so that everyone contributes. Every department of the Federal government cuts a REAL 5% this year another 5% next. PLUS benefits for federal workers accrue at a lower rate in the future.
The real impact of the 5% cuts will be easier than one might think. My business experience tells me that you can look at all of your suppliers and find 5-10% simply by following a few good business practices:
Since the government is likely the largest customer insist on not only the best prices but the best terms. Someone out there must be getting a better deal – find it and get it – even if you are only looking across the myriad of government agencies I would wager that the deals are not identical between say the DOL, DOD and DHHS — get the best deal for all.
Competitively bid all projects, again, prices have a way of going down.
Don’t replace retirements and voluntary quits. Work has a way of disappearing – not being picked up by others.
And there are many other ways…
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Very enlightening indeed and yet … All we hear is reducing the debt by getting the wealthy to pay their fair share.
Dick
Richard D Quinn Editor
http://www.quinnscommentary.com
Health Insurance Illuminated http://blog.horizonblue.com/
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