HOW MUCH FOR THAT UNFUNDED LIABILITY IN THE WINDOW?
December 21, 2004
So how much will Medicare's new prescription-drug benefit cost the U.S. government, asks the Wall Street Journal?
According to the Treasury Department and the Government Accountability Office:
- Over the next 75 years, Medicare's new prescription drug benefit will cost $6.306 trillion for current workers and retirees
- It will cost $8.119 trillion if those who will join the work force in the future are counted.
The new prescription-drug benefit is one of the largest unfunded liabilities ever undertaken by the federal government, says David Walker, comptroller general of the United States and chief of the GAO.
According to the GAO:
- The U.S. government's gross debt (including borrowing between arms of the government) came to $7.4 trillion, or about $25,000 for every person in the country, as of September, when the fiscal year ended.
- Adding in the gap between funding streams and the cost of promises to pay Social Security and Medicare benefits, veterans' health care and other unfunded commitments and liabilities brings the total to $45.9 trillion, or about $145,000 a person.
Without reform, says Walker, known demographic trends, rising health-care costs and projected growth in federal spending for Social Security, Medicare and Medicaid will result in massive fiscal pressures that, if not effectively addressed, could cripple the economy, threaten our national security and adversely affect the quality of life of Americans in the future.
Source: David Wessel, "GAO Says Medicare Drug Benefit Will Cost More Than $6 Trillion," Wall Street Journal, December 20, 2004.
For GAO study
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