New estimates the Congressional Budget Office (CBO) released Tuesday underscore that Medicare must change, a lot. More Democrats must embrace this. But Republicans also must accept that they do not have a monopoly on ideas about how to fix the program.
In this year’s long-term budget outlook, Congress’s non-partisan budget analysts project that spending on major federal health-care programs would nearly double over the next 25 years under current policies, from 5.4 percent of gross domestic product (GDP) to 10.4 percent. Along with a death spiral of ever-higher interest payments, that would push the federal debt to nearly 200 percent by 2037. Forget the Occupy movement; we twenty-somethings should be out in the streets protesting this financial ruin in store for us, which our parents’ generation has so far resolutely refused to do much of anything to fix.
Hordes of retiring boomers would take their toll on the Treasury, but the big budget-killer would be rapid per-patient health-care cost inflation, which has outpaced economic growth by an average of 1.6 percentage points every year since the mid 1980s. In other words, unless Congress enacts truly massive tax increases, something about how the government delivers health care must change.
Of course, some Democrats have recognized that Medicare reform is essential to long-term budget health; they just want reform that doesn’t significantly alter the program’s broad structure by, for example, giving seniors vouchers with which to seek private insurance, a key component of GOP Rep. Paul Ryan’s Medicare plan. President Obama proposed his own tweaks last year that involved setting hard caps on cost growth.
But the best solution would probably draw from both sides.
The Republican instinct to give patients more “skin in the game” could result in savings. So could finding a way for Congress to set aside a certain amount of the budget, and no more, for federal health programs, allowing the country to determine exactly how much national wealth it is willing to spend on them. Democrats too quickly dismiss such things as a betrayal of seniors, who tend to vote with their Medicare checks.
Yet the Republicans’ approach doesn’t have a clear mechanism for controlling costs should their “skin in the game” system fail to rein them in, nor does it raise any new revenue to finance the boomers’ retirement, a necessary complement to Medicare reform. So the president’s plan to raise federal tax receipts and empower an independent body of experts to hardheadedly evaluate what really works — and, therefore, what the government should pay for — could be indispensible to financing health-care delivery. Republicans who hyperbolically label such things “death panels” don’t help, and the GOP’s unwillingness to compromise on most anything lately suggests it will be harder to convince the right to accept Democratic suggestions in any negotiated solution.
It is that allergy to compromise — seen on both sides, but virtually a requirement for membership in the Republican Party these days — that is the biggest obstacle to fixing America’s finances. Democrats must continue their evolution toward accepting the fact that Medicare must really change, which means less “ending Medicare” rhetoric. Republicans must begin making a commensurate effort to set aside their ideological preoccupations, accepting that the federal government might have to raise taxes or make hard choices about when certain procedures aren’t cost-effective. As the CBO’s latest numbers demonstrate, the stakes are too high for anything else.