Fact: If President Obama and Congress do nothing, Medicare will go broke by 2024.
The independent auditor of the Medicare program (known as the Medicare Actuary) released a report in May that concluded Medicare will go bankrupt five years sooner than originally projected. The program is already out of cash; in fact, in 2010 alone, the program’s cash flow deficit will exceed $32 billion!
So how are we paying for benefits today?
These IOUs, in the form of Treasury bonds, are the borrowing that currently enables the government to pay its Medicare hospital bills — but even these IOUs will be exhausted by 2024.
We cannot wait until New Year’s Eve in 2023 to address this looming crisis. A Republican-controlled House of Representatives recently approved a budget blueprint written by its Budget Committee Chairman, Paul Ryan, which proposes not only to reduce the nation’s debt by $6.2 trillion over the next 10 years, but makes Medicare more solvent for our seniors, now and in the future.
It recommends a change to the Medicare program under which the federal government would provide seniors with financial assistance to help them purchase insurance in the private market, rather than have much of their bills paid directly by the government. This reform proposal would provide seniors with considerable flexibility and choices in their health care, as opposed to forcing them into a financially unsustainable, one-size-fits-all government-run program. The most important thing to understand is that these proposed changes would also not affect current Medicare beneficiaries or those 55 years of age or over, whatsoever.
Former Congressional Budget Office Director Alice Rivlin recently wrote, “it would be a serious mistake for health care reformers to demonize the concept of premium support[.]” She proposes a hybrid of Chairman Ryan’s premium support proposal and Medicare as it’s currently structured.
The bottom line is that Medicare is insolvent and, if nothing is done to reform it, will not be able to pay the benefits it promises.
Instead of providing their own ideas of how to fix Medicare, Democrats have just demonized the Republicans ideas — one liberal ad even has a “congressman” pushing a grandmother off a cliff! Former President Bill Clinton recently expressed concern with his party’s approach to entitlement reform, saying: “I am afraid that the Democrats will draw the conclusion ... that we shouldn’t do anything ... The Democrats may have to give up some short-term political gain by whipping up fear, if it’s a reasonable Social Security proposal, if it’s a reasonable Medicare proposal. You cannot have health care devour the economy.”
Even the liberal New York Times recently editorialized, “sooner or later, Democrats will have to admit that Medicare cannot keep running as it is.”
The Ryan proposal is a bold first step in a conversation that must occur if we want to preserve and protect Medicare for the future and avoid a looming financial calamity. If critics have a better idea, put it on the table. But simply doing nothing is not an option.
President Obama in 2010 lectured that, “we’re not going to be able to do anything about any of these entitlements if what we do is characterize whatever proposals are put out there as, ‘Well, you know, that’s — the other party’s being irresponsible. The other party is trying to hurt our senior citizens. That the other party is doing X, Y, Z.’
I hope he, and those in his party, will heed his lecture and join us at the table to find a solution to address the nation’s entitlement crisis.
Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his Web site at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.