Here are two headlines:
“Budget Proposes $845 Billion Slash to Medicare Spending”
“Budget Proposes 88% Boost in Medicare Spending”
One would think these are competing budget proposals from two diametrically opposed plans for Medicare.
In fact, they are both descriptors for the exact same budget proposal. The one that President Trump released this week.
This is because DC math relies on an ever-increasing baseline. The Trump Budget proposed a series of reforms – which are similar to reforms that President Obama proposed – that would result in an 88% increase in Medicare spending over the next 10 years. But the baseline assumes an 111% increase in Medicare spending during that period. So, any plan that falls short of more than doubling spending in the next decade is considered a “cut” in DC.
If you scanned the headlines or Twitter, you probably only got a flavor for the massive cuts to Medicare version. And DC has gotten really good at using their special baseline math to squash any savings proposals. For example, former Obama aide and popular podcaster Jon Favreau tweeted that “Every Democrat should be talking about this every day. Start running the ads now and don’t stop until Election Day,” while his partner Dan Pfeiffer called the Medicare proposal a “massive gift to Democrats.”
Senators also got in on the action, with Senator Minority Leader Chuck Schumer (D-NY) tweeting “The #TrumpBudget cuts $845 BILLION from Medicare.” Senator Blumenthal (D-CT) added “The Trump budget’s attack on Medicare lays bare the real Republican agenda—destroy the health care safety net.” And Senator Brian Schatz (D-HI) came in with this tidy campaign quip:
One party wants to expand Medicare and Medicaid and the other wants to cut them. That’s the end of my tweet.
— Brian Schatz (@brianschatz) March 11, 2019
The problem with these and all the other push-grandma-over-the-cliff fear mongering tactics is while they have the appearance of protecting the spending status quo, they are really clinging to a baseline that has us careening towards fiscal oblivion.
According to their Long-Term Budget Outlook, CBO projects “growing budget deficits would boost debt sharply over the next 30 years; it would approach 100 percent of GDP by the end of the next decade and 152 percent by 2048. That amount would be the highest in the nation’s history by far…. The prospect of large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.”
These record setting debts and substantial risks are not baselines that need protecting. They are baselines that we should be desperately trying to avoid.
Just take a look at Medicare. Due to increasing health care prices and an aging population (a boomer turns 65 every 9 seconds), Medicare is projected to grow 7.4% each year over the next decade and more than double in spending overall. Medicare is the fastest growing major spending category in the federal budget.
The Office of the Actuary at the Center for Medicare and Medicaid Services reported last year that the Hospital Insurance Trust Fund, which funds Medicare Part A primarily through payroll taxes, will be insolvent by 2026, three years earlier than the prior year’s report. At that point, it will only be able to pay out 91% of benefits, declining to 78% of benefits by 2042.
Contrary to convenient quips and 2020 election bait, Medicare is not being protected by opponents of reforms. Far from it.
If the plan is to just rely on general fund transfers rather than dedicated payroll taxes to patch the gap in Part A funding, that will only exacerbate the $37.3 trillion in unfunded obligations that already exist due to Medicare Parts B and D.
The noble anti-reformers don’t look quite so regal when you find out they are sticking younger generations with this unaffordable bill.
Medicare needs serious structural changes to be sustained. Reforms like the ones Presidents Obama and Trump proposed that put the program on a more sustainable trajectory by eliminating waste, fraud and abuse should be celebrated as a first step towards fiscal sanity.
Yet, in this political environment, a reduction in the $35 billion in improper payments that Medicare doles out each year would be sneered by political opponents as a heartless cut.
So many of our nation’s problems are due to Washington being run by political opportunists rather than by principled leaders. President Trump’s modest proposal to increase Medicare spending by 88% rather than 111% may indeed be a “political gift” to Democrats who will spin it as punishing grannie on the campaign trail. The real numbers show that it’s the grandkid that will be taking the beating.