Insurance Quotes & Advice

Congress is quickly running out of time to come up with solution to the looming insolvency of the Medicare program.  Because of the impact of the recession on their finances, trustees for the program have had to move up the insolvency date of the program by a full two years and with the recessions still ongoing, don’t be surprised if that timetable gets cut again next year.

You can’t blame it on one party or another because both Democrats and Republicans have had control of Congress over the past decade, yet neither has acted on a problem that is quickly coming to a head.  With the recession seeing a sharp rise in unemployment, there have been a large number of baby boomers that have been forced into early retirement and are straining a program that is already past it’s breaking point.

There are only two possible solutions, raise taxes or cut benefits or a combination of both.  Neither party wants to spend the political capital to fix this mess but they are quickly running out of options the closer we get to D-Day.

The already cumbersome national debt has exploded because of the recession and the Obama administration’s bold plan for healthcare reform will add to that burden.  Later generations will likely curse us for what we’ve done to the nation’s finances because they will be paying the price for our follies for many years to come.

Many people love entitlement programs and they also love low taxes, but you can’t have it both ways.  If the government was a business, they would have been bankrupt long ago, if not for the fact that they can print their own money.

There is a third solution to the problem, if you can call it a solution because it would be a disaster for the majority of the nation’s population.  Massive runaway inflation, it would make our money as well as our debt practically worthless but that’s what we could be looking at less than ten years down the road if the government is unwilling to make the hard choices sooner rather than later.

President-elect Barack Obama and his team will be next in line to try to fix the nation’s bloated and costly healthcare system.  Despite the fact that the government is pouring out money at a torrential pace to try to save the financial system, one of the stated goals of the incoming administration is a massive overhaul of a healthcare system which has left over 45 million Americans uninsured.

Former Democratic Senate Leader Tom Daschle has been nominated as Secretary of the Health and Human Services Department.  If confirmed, Daschle will become Obama’s point man in the effort to reform healthcare in this country.

Something needs to be done soon because according to reports from the Government Accounting Office, Medicare is set to become insolvent sometime in 2019.  Healthcare cost have been spiraling out of control for decades, far outpacing inflation.

While many politicians are opposed to the idea of a socialized medicine, having 45 million Americans without healthcare insurance is unacceptable for a nation of our stature.  Since emergency rooms must provide care for any person regardless of insurance, much of the burden has fallen on state budgets which are becoming increasingly hard pressed in the wake of disruptions to the municipal bond market over the past year.

Thus far only one state has instituted mandated universal coverage, Massachusetts, and despite paying lower costs for emergency room visits, the state is quickly finding that costs are much higher than was predicted.  Still it can be considered a partial success as the number of uninsured in the state has shrunk dramatically.

Hopefully the new administration can learn from the trials and errors that Massachusetts is currently undergoing in crafting a system that is both cost effective and all encompassing which can provide affordable healthcare to every American.

The latest report issued by the Medicare Board of Trustees stated that the program will become insolvent by 2019.  Last year’s report also set in to motion the 45% cost trigger warning which forces the President and Congress to address the issue sometime this year.

When Congress created a universal prescription drug benefit with the Medicare Modernization Act of 2003 (MMA)–adding an estimated $8 trillion to the program’s long-term unfunded liability–it enacted a “cost containment” mechanism designed to control excessive general revenue funding for Medicare.

That amount becomes “excessive” when it funds more than 45 percent of the total Medicare outlays. The “trigger” for presidential and congressional action is when two consecutive Medicare trustees’ reports project that the “excessive” threshold will be met within seven years. 

The Medicare program was initially to be funded through the use of payroll taxes but the explosive growth of healthcare costs has far outstripped it’s ability to fund the program.  Most of the attention lately has been given to Social Security but in contrast that program isn’t expected to become insolvent until 2041.

The program’s growing financial woes has been accumulating for years and the cost trigger warning does little in of itself to address the long term unfunded liabilities, as it only concerns the 45% general revenue funding level.  To deal with the program’s liabilities, the government can either raise taxes, cut benefits or lower healthcare costs.

Obviously controlling healthcare costs would be the best possible solution, but seeing as no one in the government has figured out how to do that yet, that only leaves the two unpalatable options.  What ever they do decide to do, they need to do it quickly because time is running out.