Correction: The “public option” deficit starts in 2017, not 2016. See below.
Call it insanity. Call it gambling. Or call it just plain stupid. But do not call the “public option” entitlement reform—because the two are actually polar opposites.
In 2009, the Medicare Board of Trustees reports that Medicare has about $2.5 trillion in assets. Under the worst case scenario, those assets will peak at $2.712 trillion in 2012. Thereafter, assets will decline to $2.279 trillion by 2019, with losses totaling $433 billion. For every year after 2012, losses will average about $169 billion annually until 2028, when the program goes bankrupt.
It is in this context that the so-called “public option” has been proposed by Barack Obama, Nancy Pelosi, and Harry Reid. So, how do they propose paying for an additional 36 to 45 million people’s health care when the Medicare program will begin operating at staggering deficits in just a few short years?
Here’s how: By slashing Medicare spending drastically. Simply put, the cost increases of expanding government-run socialized medicine would in part be paid for by rationing health care away from the nation’s elderly. According to the Congressional Budget Office (CBO), HR 3962 will cut from Medicare about $427 billion by 2019. In principle, these cuts could help keep Medicare solvent.
But there’s one big problem. According to the recently published Center for Medicare & Medicaid Services (CMS) report, the cost of increasing coverage under the “public option” will cost over $935 billion by 2019.
Overall, that would still leave the government in the hole by $508 billion. Which is actually worse than the $433 billion hole the nation started out with. And that’s hardly entitlement reform. In fact, deform would be a more appropriate moniker.
So, the Pelosi-Reid-Obama solution? Raise taxes: by $574 billion over the next 10 years.
But there’s yet another problem. Although the program begins taxing before it begins spending and operates at a surplus until 2015, starting in 2017, by CBO’s own numbers, the “public option” itself will begin operating at a loss—when the program will spend approximately $32 billion more than it takes in—even with the confiscatory new taxes.
The “public option” deficit will grow to $69 billion in 2018. And then to $109 billion in 2019. At that rate, by 2030 it will have lost more than $1 trillion.
Which is not good, because to keep Medicare, Medicaid, and the “public option” afloat will soon cost more than $1 trillion a year—and to keep the “public option” out of deficit more Medicare cuts would be needed to prevent it from proceeding to bankruptcy. More rationing.
The costs for the “public option” will incrementally increase—and outpace revenue—every year after 2016 by tens of billions of dollars as more people are enrolled into these taxpayer-subsidized plans. And to keep them solvent, government-subsidized health care would have to continually be rationed and taxes increasingly raised.
And even with all of that, there’s yet another big problem.
The cost of health care itself will continue to rise, despite the promises of Pelosi, Reid, and Obama. According to the CMS report, health expenditures would actually increase under the Pelosi plan by $289 billion through 2019 over the projection that was released in June by CMS. In other words, the cost curve is being raised.
And it gets worse. According to PriceWaterhouseCooper, the cost of private insurance will rise by some 111 percent or more than double through 2019 if HR 3962 passes. The average premium today costs about $4,700. In ten years, it would cost $9,917 if the bill passes.
As the cost of private care becomes unaffordable, millions of Americans will be forced off of private insurance and onto the only option left to them—the “public option”—only to find out that the entire public system is going bankrupt.
Senator Mary Landrieu said it best recently when she stated, “Why don’t we fix the two public options [Medicare and Medicaid] we have now instead of creating a third one… I think if you asked, do you want a public option but it would force the government to go bankrupt, people would say no.”
And why? Because they are not insane. They do not want to gamble away their children’s futures. And they are not stupid.
Leave all that to the Washington political elite.
Robert Romano is the ALG Senior News Editor.
