When Sara came back to the table to deposit the drinks she led off with an apology. “I’m sorry for the slight delay, gentlemen. This is my first day back after some time off, so I’m a little slow.”
“I hope you’re okay now,” Dutch replied.
“I am, thank you,” Sara replied. “I just needed a little work from my doctor in the way of a hip replacement, but now I’m back on my feet again. All in all, I was pretty happy with the whole experience.”
“That’s the thing about Medicare,” Barry chipped in. “There’s a pretty high level of satisfaction with that system.”
“Oh, I’m not on the traditional Medicare plan,” Sara replied. “I’m signed up with one of the private programs.”
“You’ve dismantled Medicare?” asked a flummoxed Barry who directed his remark at Pete. “Is nothing sacred to you guys?”
“Well, Barry, there you go again,” Dutch replied with a little edge to his voice. At that moment Pete caught Dutch’s eye and nodded that he would take it from there, if for no other reason than to save him from getting into a major lather. Dutch looked as if he had been filling his sails and was prepared to launch into a fairly lengthy rebuttal.
“Look, Barry, all of the innovations in private healthcare delivery we spoke about during this morning’s car ride were just as applicable, perhaps even more so, for Medicare. The dismal financial condition of Medicare combined with the rapidly aging Baby Boom generation made our actions imperative.”
“If you’re standing on train tracks and you feel some rumbling, it doesn’t make much sense to wait around for a visual confirmation,” said Dutch. “You better get out of the way in a hurry.”
“That’s right,” Manny said. “We anticipated the problem of underfunding and we dealt with it. We had no choice. Entitlement programs needed to be reformed. To not act, to just keep kicking the can down the road, would have been negligent – both to current Medicare recipients and to future generations. It would have been the antithesis of our posture as a serious country.”
In Barry’s world the government’s persistent indifference towards the looming deluge in Medicare and Social Security claims meant that the train was getting so close that soon one would be able to read the small print off of its glaring headlights. The Congressional Budget Office reported that total U.S. spending on healthcare, absent any changes in federal law, was poised to grow from 16% of the economy to 37% of the economy in 2050. Further, federal spending on Medicare and Medicaid was projected to grow from 4% to 7% of GDP over that same time period. Time was rapidly running out to avoid a fiscal calamity, and the pain was likely to fall squarely on the young and the lower and middle classes.
“Well, look, for me it’s working just fine with my private plan,” said Sara. “When I was told I needed a hip replacement, I was able to go out and shop around a bit to look for a competent surgeon offering a reasonable price for the procedure. You’d be surprised how they fall all over you when they know you’re the one directing the payment. You get a whole new level of respect.
“My husband is a bit of a curmudgeon so he stayed with the old Medicare plan. Of course, once he gets set in his ways, it’s hard for him to change; he won’t even try Honey Nut Cheerios. Still, I do think there’s hope for him. He told me he’s thinking about switching to my plan given my recent experience.”
“Wait. I’m not following you. Did you abolish Medicare or not?” Barry asked.
“No, Medicare still exists,” said Manny. “We kept it around for a few reasons. First, there is a comfort level with the program for some of our citizens, and we wanted to maintain it for those who were going to retire within the next 10 years. It could be disruptive to them to change at this late a date in their retirement planning. Second, we wanted to show the confidence we had in our market-oriented approach. We felt that if people could compare the two options they would gravitate towards one of the private programs over time due to either lower costs or better service, or possibly both. Finally, we didn’t want to listen to disingenuous opposing politicians telling vulnerable seniors that we killed the Medicare system when, in fact, we strengthened it.”
“Well I hope you had the sense to raise taxes in order to fund the deficit. I think it’s important that everyone pays their fair share,” Barry argued.
“Barry, increasing taxes alone wasn’t a judicious path to closing the underfunding gap. We needed structural reform of entitlements,” Manny said.
If Barry had seen the recent projections from the Congressional Budget Office he would have known this to be true. They estimated that tax rates on the middle bracket would need to rise to 47% and to 66% for the highest bracket by 2050 in order to fund the gap presented by Social Security, Medicare and Medicaid solely through taxes. Corporate taxes would also need to rise to 66% by that time.
How does that passage go? Rend unto Caesar that which is Caesar’s…
Such an approach would crash the stock market, manifestly decrease the American standard of living, and actually impede, if not fully curtail, the ability for workers to save for retirement. On a governmental level, there would be little money available for all of its other priorities (such as defense and the protection of our borders), and the burden on the younger generation would be particularly oppressive in this scenario.