Latest posts by Jane M. Orient, M.D. (see all)
- Would You Rather Save $10.46 or $500 on Healthcare? - November 4, 2019
- The Democrats’ Bidding War - October 2, 2019
- Money Can’t Buy You Health - June 12, 2019
Mr. Trump has been castigated for saying that if the government goes bankrupt, he’d get creditors to accept less. That is standard operating procedure for businesses. Creditors make deals because something is better than nothing, and if a company is utterly destroyed, nothing is what they will get. They may complain, but unless they were actually defrauded, they voluntarily assumed a risk of loss, hoping to make a profit.
The situation with government is not quite the same. But neither is it altogether different.
Every knowledgeable person who is not in deep denial knows that the U.S. government has already accumulated debts that can never be repaid, and made promises it cannot keep. How rude of Mr. Trump to say it out loud!
A huge part of the government’s obligation is owed to recipients of Social Security and Medicare. These programs are already paying out more than they take in from payroll taxes. Their future unfunded liabilities have been variously calculated. Maybe they are $40 trillion, maybe $100 trillion. The lowest estimate might as well be infinite: it is impossible for government to pay.
We already have seniors in the streets with signs that say “Hands off my Medicare!”
Say what? Whose Medicare? Its instigator, Lyndon Baines Johnson, said it was his Medicare. To be sure that hisprogram succeeded, he virtually wiped out the private insurance alternative. Aside from a few employment-related programs for which Medicare is the primary payer, almost all plans for persons over 65 are supplements, which only cover part of what Medicare allows.
If an insurance policy is yours, you have a contract with the company. You probably didn’t read it, but you at least got it and should have kept it. Unlike a retirement fund or a real insurance policy, Social Security and Medicare are entitlements—to whatever Congress chooses to provide at a given time. Congress could cancel your benefits at any time, and it has for selected beneficiaries deemed unworthy. What could you do about it aside from voting them out at the next election?
There’s the “social contract.” It’s not enforceable in court; it’s just an ethical obligation. We Baby Boomers didn’t have a choice about paying the tax, and they promised to take care of us. But what does it really mean? We paid taxes to support older retirees, and in turn we expect the government to tax the younger generation to support us. Like in all pyramid schemes, the early subscribers did well, but eventually the pool of new subscribers will run dry.
How about this deal between me and the hard-working young man who is servicing my pickup truck: “I’ll pay a relatively modest tax to provide older people with good benefits, and you’ll pay a higher tax to take care of me, and when the money runs out, the government might buy you a suicide drug.” Would anyone consent to that?
That’s the deal Congress imposed on Americans, who didn’t understand what it meant—or who possibly think it is ok to mortgage the future of our children.
No healthcare reform is credible unless it addresses the impending crash of Medicare. As Mr. Trump said, everything is negotiable, and I’ll make the first offer. I’ll relinquish all claims on Medicare in return for a monthly annuity of half the expected value of Medicare coverage. I’ll take responsibility for paying for my medical care, and forgo the Medicare claims processing, utilization review, “quality assurance,” compliance auditing, etc. At least half of all Medicare revenue is wasted on such administrative overhead. I’d face the risk of a big hospital bill, but better that than the risk of treatment in a facility that benefits from my early demise. Some hospitals might be willing to treat me in return for assigning my annuity to them. Or if I reject Medicare on ethical grounds, I can join a health sharing ministry. To sweeten the deal, the government could exempt me from capital gains taxes if I sell assets to pay those who help me. Most capital gains are fictitious anyway because of deterioration in the value of the dollar. And the government could allow greatly expanded health savings accounts.
People who like “their” Medicare could keep it. The rest of us are willing to deal, Mr. Trump!