We the People have trouble believing what our 'public servants' want us to accept as truth. That's because our elected officials almost always misrepresent things --- such as what some new government program will cost us down the road, for example.
Of course, we like the essentially free goodies promised at the time. We just don't like to pay full cost. We very much prefer bargains when making purchases, so the politicians tell us half truths when 'giving' us the good stuff.
In other words, the politically provided, vote getting, and popular free lunches are plentiful, enjoyed and appreciated --- until the bill comes due. But even then the financially necessary modifications, rollbacks or tax increases don't come. As a result, the unpaid bills keep piling up and the financial mess eventually ends up being an enormous and seemingly insoluble one --- like now.
And although it was long ago easily predictable, it wasn't predicted. It was ignored --- by all of us.
Whether the 'public servants' are confused, lying or mistaken when these programs are created is often in doubt, but that they are frequently wrong by tens and even hundreds of billions of dollars in annual cost estimates is indisputable.
The plain fact is that new initiatives usually cost multiples of what We the People are told at the time of enactment, but trying to undo that which has already been done is nigh impossible after the 'feel good' legislation is in effect. For example, ObamaCare will be with us for a very long time as has been the 'temporary' federal income tax legislation first passed in 1862 and made permanent by the 16th amendment to the U.S. Constitution in 1913.
We'll review the initial financial predictions associated with Medicare herein. Those fantasy financial projections are instructive and serve both as a history lesson and an indication of why we should never take government's cost projections seriously. Instead we should recognize them for what these legislated financial follies really are --- a humongous underestimation of the eventual costs to both current and future taxpayers.
Medicare at 50: Hello, Mid-Life Crisis is subtitled 'In 1967 the projected cost by 1990 was $12 billion. Actual cost: $100 billion. In seven years it will hit $1 trillion:'
"July 30 (represented) 50 years since President Lyndon B. Johnson signed Medicare into law. The only birthday gift this middle-age government program merits is a reality check.
Health insurance for senior citizens was part of LBJ’s expansion of the welfare state, all in the service of establishing a “Great Society.” Yet many beneficiaries today are struggling to secure access to high-quality care. Future beneficiaries, meanwhile, are forking over billions of dollars today to keep a program afloat that may be bankrupt when they retire—unless fundamental reforms are enacted.
Johnson had high hopes for Medicare. It grew, he said, from the “seeds of compassion and duty which have today flowered into care for the sick.” At the time, many people over 65 were unable to afford private health insurance. The president believed the new program would provide affordable, sustainable health care.
But Medicare spending has zoomed far beyond original expectations and is now anything but sustainable. In its first year, 1966, Medicare spent $3 billion. In 1967 the House Ways and Means Committee predicted that the program would cost $12 billion by 1990. It ended up costing $110 billion that year. Last year the program cost $511 billion, and seven years from now it will double to more than $1 trillion, according to the Kaiser Family Foundation. The latest projections from Medicare’s trustees, released this month, project that the program’s main trust fund, for hospital care, will be exhausted by 2030.
Medicare has been dogged by fraud and other improper payments—$60 billion overall in fiscal 2014, according to a recent report by the Government Accountability Office.
To keep Medicare spending under control, payments to health-care providers by the program have consistently lagged behind those made by private insurers. The American Hospital Association reports that hospitals took in 88 cents of every dollar spent caring for Medicare beneficiaries in 2013.
As a result nearly three in 10 seniors on Medicare struggle to find a primary-care doctor who will treat them, according to the Medicare Payment Advisory Commission. Another survey conducted by Jackson Healthcare, the health-care staffing company, found that 10% of the more than 2,000 physicians it surveyed don’t see Medicare patients at all. . . .
In 1965 eligibility for Medicare was set at age 65, which was reasonable enough, since life expectancy was 70. Today life expectancy is 79, and could reach 84 by 2050. We should be thrilled that people are living longer. But those extra years put additional strain on our health-care system....
The number of Medicare beneficiaries has also skyrocketed since the program’s inception. It initially served 19 million people. Today the program serves almost 50 million beneficiaries—and every day 10,000 baby boomers join the program’s ranks . . . .
If Medicare is to survive into old age, the program has to be converted from an open-ended entitlement to a system of means-tested vouchers. . . .
The way to honor Medicare on its 50th birthday is to fix what ails it. Without timely intervention, the program’s condition will only worsen."
Summing Up
We can't afford to continue all these government entitlement programs as they exist today.
Neither will our kids and grandkids be able to afford them as they inherit the current government dominated, debt ridden and slow growth economy that we've created.
Something's 'gotta give' and things must change real soon.
Similar to the costly and unaffordable system of public education in America (K-12 through college), means testing for eligibility, free choice and vouchers represent the only viable long term solution to the existing financially out-of-control system of government entitlements.
To do otherwise means that there's a financial, medical and human disaster in our future, and no American wants that.
That's my take.
Thanks. Bob.
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