WASHINGTON, D.C. – Medicare and Social Security are going broke. That’s according to the Medicare and Social Security Trustees, as well as the Congressional Budget Office, who have repeatedly warned that these programs are fiscally unsustainable. But there is more to this story.
As House Budget Committee Chairman Tom Price, M.D. (GA-06) put it during the Committee’s hearing this week on Restoring the Trust for Americans At or Near Retirement, “unfortunately, the financial well-being of the programs is just one of the challenges that we face. If Medicare and Social Security were on solid financial footing – which they clearly are not – the programs would still be suffering from an antiquated and flawed design. In short, recipients are not getting the highest level of benefit and services they could under a reformed system.”
So what’s to be done?
The House Budget Committee has embarked on an initiative called Restoring the Trust for All Generations to raise awareness about the fiscal and policy challenges inherent in Medicare, Social Security, and other automatic Federal spending programs. The aim is to achieve a critical mass of support in Congress and across the country to save, strengthen, and secure these programs. This week’s hearing – the third in a series of hearings begun last summer on this issue – focused on both the financial failings of the current structure of our health and retirement programs as well as the need to adopt a system that better serves America’s seniors.
For Medicare, that means a system that puts personal health care decisions back in the hands of individuals, not the Washington bureaucracy, so they are the ones deciding when and how to get the most appropriate level of care. As Dr. Scott Gottlieb, M.D. – Resident Fellow at the American Enterprise Institute – noted in his testimony:
“There’s going to be rationing in the system. That’s the reality. The questions is: who’s going to do the rationing? Is it going to be done by Medicare and more of a central authority, or are we going to allow actors in the marketplace to make those decisions, consumers or providers? We’re making a decision to shift the node of decision-making, if you will, on rationing to both providers in Medicare and away from consumers. That seems to be a deliberative decision that we’ve made in the last five or seven years. I would argue I think that the more we can shift these kinds of considerations onto consumers the more we are going to have people be able to exercise discretion in one of the most personal decisions that they are going to make which is how they get medical care.”
As for the fiscal health of Social Security, the challenge is a bit more straightforward as is the consequence of inaction. Or as Dr. Jason Fichtner, Ph.D. – Senior Research Fellow at the Mercatus Center at George Mason University – put it:
“Fiscal health for Social Security means that we have enough revenue coming in to pay benefits. And under current law – so if nothing is done by Congress or the president – if we don’t do anything, by law, benefits will be cut around 2035 by about 25 percent…It happens automatically unless Congress does something to stop it.”
“Unless Congress does something to stop it.” That’s the goal of the Restoring the Trust initiative – to take action to stop Medicare and Social Security from careening toward insolvency and instead to do something to save, strengthen, and secure them for today’s beneficiaries and future generations. Otherwise, these crucial programs will not have enough resources to provide full benefits for millions of Americans. Or as Daniel Weber – Founder of the Association of Mature American Citizens – describes it:
“Right now Social Security is like an airplane that is taking off for a flight, and it doesn’t have enough gas to get to the destination.”