Trump Can’t Make America Great If He Kicks the Medicare Can Down the Road
Republicans in Washington face a tough question after unexpectedly winning the presidency and controlling the Senate in the 2016 elections. They have regained single-party governance for the first time in a decade, with GOP hands on all the electoral levers of federal government. Donald Trump will have an opportunity to nominate a successor to the late Antonin Scalia, restoring the nominally conservative balance to the Supreme Court.
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The question is this: What now? One answer, ironically, comes from Nancy Pelosi.
Republicans in Congress have long hoped to reinvent Medicare to resolve trillions of dollars in unfunded mandates over the next few decades. Just within the next decade, the Congressional Budget Office projects that Medicare spending will rise from $648 billion in 2015 to $1.28 trillion in 2025. Heritage Foundation senior fellow Dr. Robert Moffitt warned in July that “outlays will generally outpace the growth in the general economy (as measured by GDP), aggregate national health expenditures, and private health insurance.”
Related: Pelosi Warns Trump and Ryan Are Overplaying Their Hands on Medicare
The only solutions on the current trajectory to bend the cost curve downward while maintaining the current single-payer framework of Medicare will be “major tax increases, savage benefit cuts, or some undesirable combination of both.”
If that sounds familiar, it should. Colorado voters overwhelmingly rejected a referendum that would have forced its residents into a single-payer health system called ColoradoCare. The measure failed spectacularly in large part because of a non-partisan analysis from Colorado Health Institute that predicted a sea of red ink. The program’s budget would have quickly run annual deficits in the billions while doing nearly nothing to save health-care costs. The only way to close those gaps, CHI concluded, were either tax increases or benefit cuts and reducing payments to providers, who would then be incentivized to seek business elsewhere.
As I wrote at the time, those are the inevitable end options in single-payer systems. Those operate on scarcity models, using rationing and taxation where healthy markets use price signaling, competition, and incentives for providers to join markets rather than drive them out. It’s no coincidence that Congress has used the same options in futile attempts to tweak Medicare’s single-payer structure and no surprise that they have not solved the underlying structural issues of an aging population and fewer workers from whom to transfer wealth.
House Speaker Paul Ryan has seen the writing on the wall and has proposed a restructuring of Medicare into a premium-support model to serve those who come into the system in the future. Democrats have attacked this as “privatizing Medicare,” and Pelosi warned this week that she will rally Democrats to defeat any attempt by Republicans to implement it. She warned Ryan what happened when George W. Bush tried reforming Social Security in 2005.