Medicare Is Already Broke

Last week we noted that the Social Security system is going broke. Medicare, though, which provides for the health of America’s seniors is already broke.

With 77 million baby boomers retiring, and a $716 billion reduction in future funding of Medicare thanks to the Affordable Care Act (Obamacare), Medicare may be in an even more precarious financial condition than the Social Security system.

Trustees for the Social Security system are also trustees for Medicare and wrote in their recently released annual report that Medicare Part A, which helps pay for hospital care, home-health services following hospital stays, skilled nursing and hospice care for the aged and disabled “fails the test of short-range financial adequacy, as its trust fund ratio is already below 100% of annual costs, and is expected to stay about unchanged to 2021 before declining in a continuous fashion until reserve depletion in 2029.”

Medicare Part B, which pays for physician, outpatient hospital, home health and other services, and Part D, which subsidizes drug coverage, are financed from premiums and general revenues, so they are currently adequately funded, but their costs are expected to rise steadily. So higher taxes and higher premiums will be needed to support them.

The federal government spent $595 billion on Medicare, in the 2016 fiscal year, but adding on the cost of premiums and other funds collected brings the total cost to $699 billion.

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24 Million Losing Health Insurance? Not Really.

The Affordable Care Act (ACA), as The Washington Times noted, is “a public policy flop of epic proportions.”

It is costing much more and insuring far fewer Americans than projected, while adding a huge government bureaucracy to the healthcare system, which was heavily regulated even before the ACA. Even though every American must either purchase health insurance or pay a penalty, many are choosing to pay the penalty instead. In spite of heavy subsidies, the number of Americans insured under the ACA is millions short of the number projected.

The Congressional Budget Office (CBO) forecasted In February 2013 that 26 million Americans would be insured through the ACA by 2017. Instead, only 10 million Americans are insured through the ACA – in spite of government subsidies and penalties requiring enrollment.

Meanwhile, new research from the Health and Human Services Department shows that, on average, premiums in the individual market have more than doubled since 2013 in the 39 states where Obamacare exchanges are federally run.

In spite of sharply rising premiums, insurers are bailing on the ACA (aka Obamacare), because they are losing money on it. Blue CrossBlue Shield of Kansas City, for example, has just withdrawn its Obamacare plans for Kansas and Missouri, citing losses of $100 million. In many markets, Americans who use the federal exchanges to purchase insurance have only one insurer from which to purchase insurance. In some cases, insurers have withdrawn completely.

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Obamacare Resuscitated

“If you don’t buy this magazine, we’ll kill this dog.”

So said a cover of National Lampoon back in 1973. We’re reminded of the infamous cover when we reflect on the ignoble fate of the American Health Care Act (AHCA), which was meant to replace the widely disliked Affordable Care Act (ACA), aka Obamacare.National Lampoon

Republicans in Congress were faced with a similar choice last week. While the Republicans gained a majority based largely on the promise of overturning Obamacare, polls showed the AHCA was also unpopular. A Quinnipiac University poll found that only 17% of American voters approved of the AHCA, while 56% opposed it.

About one in a thousand voters knows what’s in the American Health Care Act, but given media propaganda about Americans being left to die without government-subsidized health insurance, it’s understandable why the act was unpopular.

It didn’t help that the Congressional Budget Office predicted that the proposed legislation would result in 24 million Americans lacking health insurance by 2026 (note: the CBO also predicted that, thanks to Obamacare, the individual market would enroll 26 million by this year. Instead, enrollment is just 10 million).

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