Does Our Federal Government Have A Revenue Or Spending Problem?

Critics of The Ryan Plan argue that under Rep. Paul Ryan’s (R-WI) proposed legislation the nature of medicare in being a single-payer system, in which doctors and hospitals are paid directly from the federal government, would completely end. They attest The Ryan Plan would replace Medicare as we know it now with a new & different system where the federal government pays the insurance companies, the insurance companies take a profit cut, and then they pay the doctors and hospitals.  Skeptics also point out that The Ryan Plan’s vouchers are tied to general inflation, so if healthcare costs continue to grow faster than inflation seniors will end up spending a huge chunk of their income to be insured.  Finally, liberals claim that statements made by the right that Medicare will end in 10 years if nothing changes is a falsehood and it is funded through at least 2024.  They see there being challenges with Medicare but nothing the Federal Government can’t handle within the “humane and working system” we already have.

The key is the bi-partisan “gang of 5″  finding a middle ground by reforming our existing system by shoring up inefficiencies, fraud, redundancy, adjusting for a longer lifespan, tackling administrative costs and being more selective on the eligibility, reforming the existing system.

True the HI portion of the Medicare Trust Fund (hospital insurance) could potentially run out of money by 2024, which is already 5 years sooner than projections, but focusing on the HI trust fund distracts attention from the much larger drain on the budget from other Medicare spending as medicare actually has (2) trust funds. The other fund is the supplementary medical insurance (SMI) fund. It’s used to pay for the other parts of Medicare—Part B expenses for physicians and outpatient care and Part D prescription drug expenses. Part C of Medicare provides Medicare Advantage insurance and other insurance plans that are an alternative to coverage under basic Medicare Parts A and B. Part C expenses are paid out of both the HI and SMI funds Unlike Social Security and the HI fund, the SMI is not really a self-contained trust fund. It is replenished as needed with general government revenues. It can’t run out of money as long as the government continues paying all its bills. But, and this is the big but, those bills, of course, have been Exploding! The trustees’ project Part B costs to grow by an average of 7.5 percent a year for the next five years. Part D expenditures are projected to rise by an average of 9.7 percent a year through 2020. Good luck trying to afford those cost increases, especially as surging numbers of retired baby boomers ratchet up demand for Medicare services. Meanwhile, over in the HI fund, its deteriorating financial condition meant that the gap between its income (Medicare payroll taxes) and program expenses were covered by spending down its trust fund by $32.3 billion—only about 15 percent of the SMI shortfall. So, it is all speculative but Senators Charles Schumer(D-NY)  and Mitch McConnell (R-KY) both concurred Sunday on Meet The Press that Medicare in its complete version meaning Hi and SMI could very well become insolvent by 2020.  I believe the key is the bi-partisan “gang of 5″ ( it was 6 until Dr. Tom Coburn withdrew from negotiations) finding a middle ground by reforming our existing system by shoring up inefficiencies, fraud, redundancy, adjusting for longer lifespan, tackling administrative costs and being more selective on the eligibility on its roles.  Bottom line is the current system has to be reformed.

To that end, I recently had a healthy debate with a leftist pundit who declared the usual fix to this and other budgetary problems:  “Allow the Bush Tax Cuts to expire”.  Throwing more money at the problem always seems to be the default remedy from liberals!

I really have no problem with those making over $200k having their tax cuts expire if we can really trust the Federal Government to be a good steward of those funds and appropriate them in good faith.  But, doesn’t that seem like wishful thinking based on the history of Washington’s spending patterns?  One only needs to research the blatant redundancy in government agencies at current.  The nonpartisan Government Accountability Office (a name that seems oxymoronic) recently released a report at the urging of Sen. Tom Coburn (R-OK). GAO highlighted 80 different economic development programs at the Department of Commerce, HUD, Department of Agriculture and Small Business Administration, that spent a combined $6.5 billion last year and often overlapped. For example, the four agencies combined to have 52 different programs that fund ‘entrepreneurial efforts,’ 35 programs for infrastructure, and 26 programs for telecommunications! In fact, according to the Journal, Coburn identified “between $100 billion and $200 billion in duplicate spending just in telecommunications.

So, do we have a revenue problem or a spending problem in Washington? If we the taxpayers could corner our representatives into legislation that mandates new revenues from the tax cut expirations are to be directly appropriated to Medicare and other budgetary dragons, then the utopian liberals are right, the cure is easy.  But, I adopt the philosophy that past actions are a great indicator of future behavior.  I know people close to me that have the same problem the Federal Government has, a major spending problem!  And if the Democrats continue to throw daggers at the plans that the new class of House Republicans is coming up with and, as former President Bill Clinton said just this past weekend, do nothing, then in ten years Grandma could very well be headed over the cliff!

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