Published for www.keithhennessey.com, August 25, 2012.
Let’s examine a few quotes from President Obama’s weekly address, which this week is about Medicare.
THE PRESIDENT: I saw how important things like Medicare and Social Security were in [my grandparents’] lives. … That’s why, as President, my goal has been to strengthen these programs now, and preserve them for future generations. Because today’s seniors deserve that same peace of mind. And the millions of Americans who are working hard right now deserve to know that the care they need will be available when they need it.
Medicare, Social Security, and Medicaid are growing at unsustainable rates. The “millions of Americans who are working hard right now” are paying taxes into a system that will be unable to afford to pay the benefits it is promising them today. President Obama says these workers “deserve to know that the care they need will be available when they need it,” but he has not proposed policy changes to produce that outcome.
THE PRESIDENT: We’ve extended the life of Medicare by almost a decade.
No you haven’t. The Affordable Care Act (ACA, also known as “ObamaCare”) slowed Medicare spending growth. The Medicare Hospital Insurance Trust Fund includes less than half of Medicare spending. You can argue that you have extended the life of this trust fund by “almost a decade,” but trust fund accounting ignores a more immediate cash flow problem. Since the HI trust fund contains only IOUs from the government to itself, this accounting ignores the question of where to find the $296 B in cash this year to pay for Medicare spending above that covered by Medicare payroll taxes and premiums. Medicare has never been a fully self-funded program, and even with the savings enacted in the Affordable Care Act, it is still an enormous pressure on the rest of the budget.