NCPA - National Center for Policy Analysis


July 17, 2009

President Obama has repeatedly claimed that his health care reforms also represent entitlement reform.  Not surprisingly, the Congressional Budget Office shows this claim is implausible. They have scored several health care proposals as costing more than $1 trillion in the first decade, and certainly more thereafter.  Accordingly, lawmakers are considering substantially raising taxes (during a recession!) to fund their proposals.  Of course, health care reforms that are intended to save money usually do not typically require painful tax increases to offset their cost.  The reality is that health care reform will substantially worsen the alarming condition of the long-term budget outlook where the biggest problem is Medicare, says the Heritage Foundation.

Rather than deal with Medicare's situation directly, the President and his allies promise to "bend the curve" to achieve savings across the health care spectrum -- including Medicare.  If this is true, why then would page 836 (Section 1901) of the House bill repeal the "Medicare trigger" that is intended to force legislative action when Medicare's finances worsen, asks Heritage?

  • The Medicare Modernization Act of 2003 had mandated that if more than 45 percent of Medicare expenditures were projected to come from general revenues (as opposed to dedicated revenues, such as payroll taxes and beneficiary premiums) within a seven-year period, the trustees would issue a warning.
  • Two consecutive years of this warning would require the President to offer reform legislation and Congress to give that legislation expedited consideration.

This warning has been triggered four consecutive years -- the last three of which would have required legislative action.  Yet the Democratic Congress has regularly passed rules suspending their responsibility to address Medicare's unsustainability.  Now, the House health care bill would repeal the trigger altogether.

The lesson is clear, says Heritage:

  • When the Medicare Trustees warn Congress that Medicare is on an unsustainable path to bankruptcy, the Democratic response is not reform the program, but to simply silence the trustees.
  • Consequently, Congress can continue to ignore Medicare's $38 trillion unfunded obligation.

During his campaign for president, Obama had said "we're going to have to take on entitlements, and I think we've got to do it quickly."  Instead, he proposed layering an expensive new health care entitlement on top of an entitlement system that was already projected to go bankrupt.  That will result in massive deficits and taxes dumped into the laps of our children and grandchildren.  If the President accepts the House provision repealing the Medicare trigger, it will be another nail in the coffin of our long-term financial sustainability, says Heritage.

Source: Editorial, "House Health Bill Would Silence Trustee's Medicare Bankruptcy Warnings," Heritage Foundation, July 15, 2009.

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