Duh, Why Didn’t I Think Of That

The US is spending about a half trillion dollars on senior citizens and the poor.  The government spend this money in order to provide basic health care benefits.  When one says “spend”, this means that over and above the amount the government collects in wage taxes intended to cover these costs, they spend an addition amount to the tune of about one half trillion… each year.  That’s a lot of spending.

The 7/24 media operation is just gobbling up the frenzy surround the “fiscal cliff”.   And what a sight they have to report.

The President and House leader John Boehner can not agree on even partial steps to avoid the cliff.  One side accuses the other of refusing to raise taxes on the wealthiest of Americans and the other side tries to tar the other for not being willing to cut Medicare and Medicaid.  The 7/24 media just sits there and collects advertising revenues as it hashes and rehashes the days fiscal cliff developments.  No one seems genuinely interested.

This is not a trivial problem.  The US is overspending its revenue by about $1 trillion.  This is not new.  Almost all of the overspending is due to long standing laws.  Rising health care costs and more people being added to the Medicare and Medicaid roles are drivers.  But so is the lost revenue from the Bush tax cuts and the unfunded Medicare Part D benefit.

So why should anyone be surprised that taxes must increase and the portion government spends on Medicare and Medicaid must shrink?

No one should be.  Never the less, questions remain on what taxes should increase and how would government spending on Medicare and Medicaid be reduced.

For Medicare, it is tempting to say we should increase the age when Medicare benefits kick in.  The big problem is that Americans still need coverage and would be faced with buying it on the open market.  For someone 65, open market health insurance will cost many times what one pays for Medicare.  For some it will mean no coverage or very limited coverage.  Is this fair?

Means testing has also been suggested for Medicare.  This means that if your income is a certain level, your yearly Medicare premiums would be higher.  This is probably inevitable but it won’t solve the spending problem alone.

Increasing Medicare/Medicaid wage withholding taxes seems also logical.  This is regressive and with the economy still weak, many wonder whether this is wise.  It seems to me, however, raising this tax a little is a no brainer.  Still the amount that it could be raised will not eliminate the government spending.

So what are we overlooking?

Hmmm.  The Bush tax cuts won’t solve the deficit.  Cutting Medicare and Medicaid without some offsetting new source of funds will be unfair to a large number of Americans.  And raising wage roll taxes, while necessary, will not close the gap either.  Health care costs are simply too large and are rising too fast.

Hmmm.

I wonder why we don’t begin with a down payment.  Increase some taxes, use means testing, and rededicate efforts to eliminate fraud and corruption.  Enough to live today and die tomorrow.   And, then?

Then, there should be a national team assembled (no elected officials as members) which would study and make recommendations on how to fix America’s health care system.  The goal is simple, why does America’s per capita health care cost 2x other modern countries, and how do we reduce America’s costs while maintaing (or improving) health care outcomes.

Duh, why didn’t I think of that?

 

 

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