Medicare Is Doomed

By:  Sheldon Richman
09/04/2012
       
Medicare Is Doomed

 When Democrats accuse Republicans of wanting to “end Medicare as we know it,” they are right. But Democrats do too. “Medicare as we know it” is no longer an option. It’s time for the separation of medicine and state.

When Democrats accuse Republicans of wanting to “end Medicare as we know it,” they are right. But Democrats do too. “Medicare as we know it” is no longer an option.

Leaving aside Medicare’s fatal moral defect — that it’s coercively funded — the program is doomed. It has tens of trillions of dollars in unfunded liabilities. It threatens working generations with a crushing tax burden. Because of the relative size of the Baby Boom generation, soon there will be only two workers to pay each retiree’s medical bills. Younger people might have other plans for their money.

So something’s got to give, no matter which party is in power. If the government promises to pay for older people’s medical care essentially without limit, one would expect the bill to grow fast. It’s the law of demand: as price falls, demand rises. Given that law, and assuming that taxes can’t be jacked up, there’s only one thing to do, short of abolishing the program: limit what the beneficiaries can buy.

But older people, who vote in great numbers, won’t like that. So politicians need to deceive.

President Obama’s health care plan would cut over $700 billion from Medicare. (He needs the money for Obamacare.) But he insists this will not reduce benefits. How can that be? The money will be taken from providers (and insurers under the popular alternative, Medicare Advantage), not beneficiaries, he says. But if reimbursements to providers are reduced, how could that not reduce benefits?

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Sheldon Richman (photo)

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