Senior Healthcare and Financial Crisis Returns

Philip Moeller

You can almost hear the ideological wagons circling again in Washington these days. Those intense debates about government spending and the "big three" entitlement programs--Medicaid, Medicare, and Social Security--are heating up once more.

[See AARP Moves to Protect Social Security and Medicare.]

The U.S. Supreme Court is set to hold oral arguments next week on the constitutionality of the Affordable Care Act, aka "Obamacare" to non-believers. The court may invalidate portions of the law, particularly its requirement that Americans must buy health insurance. But however it rules, there is no question that government's role in healthcare will be a big topic in the fall elections.

Rep. Paul Ryan, chair of the House Budget Committee, is back with another Republican budget proposal. It has no chance of becoming law, but it will rally the faithful and add fodder to election-year rhetoric.

The Ryan budget repeats some of the stark spending choices of his earlier proposals. It would set Medicare on the path toward raising the share of healthcare expenses that many future seniors would be asked to shoulder. Even so, it would only slow Medicare's rise as a share of all federal spending. It would also sharply cut federal spending on Medicaid, which provides big support to lower-income seniors, and is the major payer of long-term care expenses in nursing homes.

[See The State of the (Retirement) Union is Weak.]

The nonpartisan Congressional Budget Office took a look at the Ryan budget. It issued these top-level assessments of how the government's share of the economy would change over time:

Revenues: from 15 1/2 percent of GDP in 2011 to 19 percent in both 2030 and 2050

Medicare: from 3 1/4 percent of GDP in 2011 to 4 1/4 percent in 2030 and 4 3/4 percent in 2050

Medicaid and the Children's Health Insurance Program (CHIP): from 2 percent of GDP in 2011 to 1 1/4 percent in 2030 and 1 percent in 2050

Social Security: from 4 3/4 percent of GDP in 2011 to 6 percent in both 2030 and 2050

Other mandatory spending and all discretionary spending: from 12 1/2 percent of GDP in 2011 to 5 3/4 percent in 2030 and 3 3/4 percent in 2050

In other words, even with these entitlement changes, government revenues would take a bigger share of the economy. And the graying of America would, as many have said in the past, cause senior entitlement spending to rise. To pay for it all, all other government programs--as in all of them--would need to dramatically shrink. Truly, the United States would become an insurance company with an army. And this is the conservative blueprint.

In a preemptive move, AARP earlier this week began rolling out its "You Earned a Say" campaign to sensitize its 37 million members to the threats that Social Security and Medicare face. AARP bills it as an informational effort and not a political lobbying campaign. But excuse me for believing that the real message of You Earned a Say will be delivered at the ballot box. Seniors vote in big numbers. And who really wants to test whether cutting those programs is the shortest distance between a politician and the end of his career?

[See Financial Exhaustion Hitting Many Seniors.]

Talking about the nation's huge budget deficits as a fiscal crisis requires changing the meaning of crisis. This is, after all, the very same crisis that has demanded "instant" attention for years and years.

The National Commission on Fiscal Responsibility and Reform, appointed by President Obama, delivered its urgent message more than 15 months ago. It led to efforts by numerous other groups and experts, and some near-historic, near-agreements among Democrats and Republicans.

But, of course, little happened. And the government's inability to agree on much of anything gave rise to the lowest public approval ratings of Congress in the nation's history. Gallup reports that people think the second-greatest threat to the health of investment markets today is the federal budget deficit. The greatest threat? Congress itself.

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