Republican Rep. Paul Ryan plans to unveil a new Medicare proposal Thursday that would give future seniors the choice of purchasing private insurance coverage or staying in the traditional federal plan.
This will do exactly nothing.
Here’s the underlying problem that nobody is offering a legislative agenda to address: Medical spending in the Federal Budget has expanded at a compounded rate of 9% since 1980 and is projected to continue to do so.
The reason for this is that medical care generally in the private economy (e.g. health insurance premiums) is expanding in price at roughly that rate or better for the last 30 years as well, and as such so is the government side of it.
At present the government spends about $800 billion a year (up from ~$53 billion in 1980!) on medical care in all of its programs. At 9% compounded rates of growth for the 50 year old by the time he reaches 85 (35 years from now) this spending is projected to increase to $16.3 trillion.
That obviously won’t happen — the entire federal budget is currently $3.8 trillion and the entire economy is $15 trillion. If the economy grows at 3% annually every year for the next 35 years the economy will be $42 trillion in size; with the government being ~20% of the economy ($8.4 trillion) this would still leave medical care totaling twice the entire federal budget.
Again, that obviously won’t happen because you can’t spend more than 100% of something as a subset of that thing.
This has to be stopped — right here and now.
The expansion is being caused by the massive cost-shifts through all areas of the medical system. As I detail in Leverage these cost-shifts are pervasive and outrageous — we effectively in America pay for the development of every advanced technology and treatment and subsidize government-run health care worldwide! This is a very profitable model for pharmaceutical and device makers, not to mention all the other providers who look at the provision of these products as “cost plus” — the higher the price, the greater in dollars the “plus” percentage is.
There are too many points of debate to cover in one ticker on this; you can go back through my various points in this regard using the Archive function if you wish, or buy a copy of Leverage and read it for a more-succinct yet reasonably-complete treatment of the problem.
What we cannot do is continue to sit back and watch partisans like Ryan continue to lie through his teeth, along with the others in Congress on both the Left and Right. If we do not get our arms around this portion of the Federal Budget in the immediate future it will lead to the destruction of the US Government and our way of life.