By William Faloon
A fierce debate is raging as to who will pay for this nation’s skyrocketing sick-care costs.
Private companies have scaled back sharply on health care coverage they used to provide. Employees now pay an increasing percentage of their medical insurance premiums, along with higher deductibles, co-pays, and no-pays (i.e., exclusions). Many businesses provide no health coverage to their employees.1,2
Based on the median income in the United States, the typical family cannot come close to paying the staggering cost of health care themselves.
It seems rather odd, but since neither business nor individuals can afford today’s sick-care costs, the burden is increasingly being borne by the sector least able to pay, i.e., heavily indebted state and federal governments.
The federal government is already saddled with a huge unfunded Medicare liability. No one has figured out where the money will come from to cover these future health care costs.
To put this into context, the most recent estimate of Medicare’s unfunded liability is $24.6 trillion.3 Yet total federal tax revenues taken in annually (which include Medicare premiums) are only around $2 trillion.4,5 As our current President stated last year, we are approaching a point where the government will have to spend more money on Medicare than every other federal program combined!6
The most recent government report states that the Medicare hospital trust fund will go bankrupt five years sooner than what was projected a mere twelve months earlier.7
None of these numbers are reliable. Congress and agency bureaucrats use all kinds of accounting gimmicks when projecting Medicare’s date with insolvency.
For instance, the unfunded Medicare liability was pegged at $37 trillion in 2009.8 That means the government should have had $37 trillion in a trust fund earning interest in order to meet its future obligations. But politicians constantly manipulate the numbers. The latest report reduced Medicare’s official unfunded liability to $24.6 trillion. The reason for these wild fluctuations is that in any given year, officials can create “assumptions” out of thin air, like assuming doctors will take major pay cuts. Congress has not enacted these pay cuts, but bureaucrats pretend they do in order to understate Medicare’s true unfunded liability.9