Regnat Populus

The people rule.

An Entitlement Society Is A Bankrupt Society

Posted by Max Barron on May 14, 2009

aria-babiesEconomics 101 – you cannot sustain increasing debts without increasing, by wider margin, incomes.  We Conservatives know this, the government knows this – but doesn’t care, and the Wall Street Journal points it out yet again.  Our entitlement programs, more specifically Social Security and Medicare are a few years short of total collapse.  Unlike a corporation, these programs can’t file chapter 11.  Instead, Congress will drive up taxation – to no avail – in order to sustain these programs for a few more years before they do what is inevitable… fail.

The Medicare fund for hospital care will be depleted in 2017, two years earlier than government actuaries estimated a year ago. Last year marked the first time that Medicare ran a deficit, paying out more in benefits than it generates from taxes and other revenue.

The report also factors in a 21% cut in payments this year, required by law, to doctors working for Medicare. But for the past several years, Congress has canceled that reduction.

Keep in mind that the 2017 date is based on a 21% cut in payments to doctors in the program, which Congress reliably cancels.  The current Congress, controlled overwhelmingly by Democrats, is virtually guaranteed to cancel the cut again this year.  Invariably, this will bring the 2017 date down a notch.  The solution to this program’s complete and dismal failure?  It won’t be proper privatization, no sir.  It will be more tax revenues… or a heavy hand smacking the health care industry – ala Chrysler.  Or both.   

Obama administration officials used the new estimates as a rationale for overhauling health care. “Today, we’re not issuing just another government report,” HHS Secretary Kathleen Sebelius said. “It’s a wake-up call for anyone concerned about Medicare and the health of our economy. And it’s another sign that we can’t wait for real, comprehensive health reform.”

The Obama administration has proposed several ways to control Medicare costs, including cutting payments to private insurers and allowing the government to negotiate drug prices with pharmaceutical companies. Some of those cuts face resistance in Congress, which will need to approve them. Even if approved, the savings won’t come close to fully offsetting the increasing cost of the program. Many of the savings have already been reserved to pay for the administration’s plan to overhaul health care.

What Sebelius and the Obama administration are neglecting to mention is that the Medicare program has been government driven from the beginning.  And it is failing – just as anyone with any common sense would foresee.  So what’s the solution?  More government.  More entitlements… more, more, more. 

However, what the administration is careful to tip toe around is the issue of taxation.  The simple fact of the matter is that new taxes and higher taxes will be needed to prop up Medicare immediately. 

“In the end, there’s going to be a lot of huffing and puffing and some genuine savings from changes in Medicare, but there is no way to balance Medicare without significant increases in taxes,” said Henry Aaron, an economist with the liberal-leaning Brookings Institution.

Medicare, like Social Security, is a failing social experiment… One that should be kept in mind when discussing the merits of nationalized health care.  Sebelius and Obama seem to believe that all Americans should be placed in a health care system, run by the government – like Medicare and Medicaid.  As if the current entitlements aren’t abysmal drains on the economy and the senior citizens currently subjected to them.  Not one of the federally driven entitlements is in good shape, nor can they be, because there is NEVER enough money.  Take Social Security for instance, which is something that everyone pays into.

The Social Security trust fund wouldn’t be exhausted until 2037, but that is four years earlier than last year’s report predicted.

The actuaries estimated that Social Security beneficiaries would not receive a cost-of-living increase for the next two years, and that a quarter of Medicare beneficiaries would pay higher-than-usual increases in monthly premiums, 8% in 2010 and 15% in 2011.

Each year the estimated year of bankruptcy is lowered.  Last year it was 2041, now 2037, next year it will be even lower.  This is because of the simple fact that federal entitlements fail.  They always will fail.  There are far too many people drawing far too little funds.  The only solution is to raise taxes on any number of things.  Even if those tax levels were raised and new taxes were created, there still would not be enough money to sustain the level of debt from these entitlements.  So more taxes will be created and more private wealth consumed, until there simply isn’t anything left.  It is like bailing water off of a sinking Titanic with buckets. 

That is especially clear given the fact that the Baby Boomer generation is about to begin their mass move to retirement, where their collective weight will be on our shoulders as they are enrolled in Medicare and begin to draw Social Security. 

My prediction?  These failing programs will be used as another sob story justification for nationalized health care.  Which if enacted, will fail, just as every other entitlement or government run program.  Realize that since the creation of these programs tax payers have dumped tens of trillions of dollars into them… and they failed.  What makes anyone think that nationalized health care will be any different?

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