By Jack Bernard, contributing columnist
PEACHTREE CITY, Ga. | In 2037, the Social Security trust fund reserves will run out, says our government (In 2030, Medicare’s Hospital Insurance trust fund will also run out of funds.)
The only way around the third-rail dilemma regarding entitlement reform is to address it in a bipartisan, objective manner. Otherwise, it becomes a partisan issue that is used to make points.
Thus, President Joe Biden suckered in the Republicans in his State of the Union address. He implied that some, not all, GOP politicos want to reduce Social Security and Medicare benefits. That created a vocal, and predictable, backlash by right-wingers who yelled “liar,” interrupting his address. He then turned that around and said that obviously everyone supported these programs. He was cheered loudly by both parties.
Biden won the political battle, but so far has not won the war to ensure entitlement solvency.
Again, this is a bipartisan issue which directly affects not only seniors but the financial health of the nation.
Entitlements in the budget are simply costing more than is being taken in. The obvious solution is to either cut spending or increase revenues, or both. But politically, entitlements are a nightmare. Democrats are inclined to increase revenue and the GOP to cut benefits.
For example, there is a Social Security cutoff point of $160,200 for earnings. Income over that amount is not taxed. Taxing all earnings of everyone in the country, as proposed by Democrats, would solve most of the shortfall. Or we could adopt the GOP approach, raising the retirement age, which has already been done once. Or a combination of the above would also help.
Medicare is a tougher issue. The GOP has been attempting to privatize this program through Medicare Advantage (MNA). The use of these plans has risen because many people have added vision and dental benefits. And many have lower premiums.
These Medicare Advantage plans also have obvious problems for many seniors. HMOs make up the majority of MA plans. Benefits change every year, and are not transportable if you travel. Referrals are required to access specialists. There are high out of pocket costs if you are severely ill and there are specified networks of doctors and hospitals where you can receive care.
But it’s the Medicare Disadvantage program regarding governmental expenditures that is costing $7 billion more than traditional Medicare (2019). The cost of MA is projected to rise to $664 billion by 2029, so that additional cost will rise significantly. A 2019 study found that the cost to the federal government for Medicare Advantage was $321 higher per enrollee versus traditional Medicare.
In addition, there is the broader issue of the cost of care in the U.S., which is more than double ($12,914 per person) that of other democracies (averaging $6,125 per person). And our mortality/morbidity results are worse than most of these nations. We live longer lives than other nations, and we are sicker. Many observers, this author included, believe that the solution is single payer reform.
The debt relief settlement may have been easy, compared with setting the crisis coming in our budget for Social Security and Medicare reform. In any case, nothing at all will be accomplished regarding entitlement reform unless the two parties agree. The first step towards that goal is to establish a bi-partisan commission to address the entitlements issue, which is key to reducing the deficit, long-term.
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