Medicare is in serious trouble. This is not propaganda nor is this a secret. And this is also not a surprise. This is so for three very simple reasons. First, when Medicare was first created, the average American male was living into his 60’s and the average American female was living into her 70’s. Today, men are living into their 70’s and women are living into their 80’s and even 90’s. Second, when the program was created the Baby Boomers were just that – baby boomers. Today, they are retiring at a faster rate than there are young workers to support them.

Third, when Medicare was created its cost was expected to rise with inflation. It didn’t take long to realize how absurd this notion was, having grown at several times the rate of inflation for decades now. For example, at its inception in 1966, the program cost about $3 billion a year. The House Ways and Means Committee projected that in 1990 it would cost about $12 billion (a figure that accounted for inflation). What was the real price tag in 1990? $107 billion. And the out-of-control growth of the program has continued at a rapid rate. Today, the program consumes almost 15% of the federal budget. (Remember, this is separate from the additional funds spent on other big entitlements like Medicaid, SCHIP and of course, Social Security which have their own budget issues).

So it’s clear something needs to be done to alter the structure of the program. That is, if we are to have any faith that it will be around for us below 55 years old or that we will be able to honor its commitments to those over 55.

Unfortunately, for many Americans, it’s a struggle to get this far in the conversation.

Moreover, once we get this far, we have only just acknowledged the problem. The trickier part is what follows – the conversation over how to put the program on a sustainable path. This is what Cong. Ryan’s aggressive budget proposal tries to do and why he should be lauded. Ryan’s plan attempts to springboard the political discussion past the question of whether we have a Medicare problem and demands that legitimate participants in the discussion talk about actual solutions for the way forward.

I’ll save for another post an analysis of Ryan’s budget and the Medicare solutions on the table but first, it’s important that we all at least acknowledge what has been glaringly obvious for far too long – Medicare as currently structured is unsustainable.

Since passage of Obamacare, Democrats of all stripes have been interested in talking about almost any subject other than health care. Put aside talk of a signature achievement, this has been a Pandora’s box of bad policies and politics that Democrats have had to either defend at their peril or run from without directly insulting their party’s leadership and President. At this point, it’s almost a contest to see what claim proved the most outrageous, non-sensical or downright not true.

One of the first claims to fall apart was President Obama’s oft-repeated promise, “If you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan.” Since passage, health care providers have begun consolidating to avoid business-killing taxes and regulations. Insurance companies have been forced to raise premiums to account for scores of new benefit mandates and restrictions on what types of plans they can offer. And small businesses are looking to cut costs by dropping coverage for their employees who will now have to look to the expanded Medicaid program and the state exchanges to cover them. All of these adding tremendous costs and weight to a system that was supposed to become more efficient and cost-effective.

What this has mean for the private sector so far is an effort to get out. And one year out, over 1,000 waivers have been granted by the Department of Health and Human Services (HHS) to unions, non-profits and companies negatively affected by the legislation. Ironically, a cursory review of the waiver list shows a disproportionate number of unions, whom you may remember, were some of the bill’s loudest proponents while it was being debated. Unsurprisingly, when forced to comply with its provisions, unions demonstrated their special status with the Obama Administration and demanded to be saved from this very expensive law.

And it’s not just the basic health care plans that are being altered. Millions of Americans who rely on their FSA’s (Flexible Spending Account) to pay for their child’s special education schooling or HSA’s (Health Saving Account) to pay for over-the-counter medicines will have to find other, likely more expensive options , to get these benefits or pay for these services. Unfortunately, those seeking to actually restrain health care costs are the real losers because it was programs like HSA’s, FSA’s and Medicare Advantage – which also took a major hit under Obamacare – that sought to inject competition into the process and more importantly, give more control over health care costs to the consumer.

Strangely, Nancy Pelosi’s statement that “we have to pass it to find out what’s in it” has proven quite prescient. Slowly but surely, as more of the law’s thousands of provisions are painfully unearthed, we are forced to deal with the explosion of costs, rosy revenue projections, overly burdensome nature of the regulations, and generally unconstitutional nature of the bill’s central provision. I could go on – and I plan to in future posts – but I feel each (broken) promise and corresponding reality deserves its own special attention.

Perhaps next time I’ll discuss what I think could be the biggest whopper of them all, “Obamacare is going to add 30 million people to the insurance rolls AND save billions of dollars doing it.” I know, try not to laugh too hard.

So, what’s your favorite broken promise of Obamacare?

This picture cost the Pentagon $25 million dollars

My blogging colleague FMFP’s recent writings on the ongoing struggle for the US government to agree on a budget for this coming year highlighted the discrepancy between mandatory (entitlement programs such as Social Security, Medicare, and Medicaid) and discretionary funding, basically everything else the government pays for, including defense spending. FMFP cited a poll that showed that far too many Americans are unaware of the fact that entitlement spending is what is really driving our country toward insolvency and another poll by WSJ/NBC also portrays an American populace unwilling to give up any ‘significant’ portion of these program’s benefits to fix the budget. FMFP, after using Tarrance Group poll results showing that a majority of Americans think the government spends more on defense than on entitlements, accurately pointed out defense/security procurements take up roughly 20% of the budget while Social Security and Medicare take up almost twice as much and are expected to explode in coming decades.

It is this context, that I recently read Robert Kagan’s article ‘The Price of Power‘. Here’s his intro:

In other words, if the US really wants to cut down on our defense spending we are going to have to change or adjust our strategic posture. To some, specifically Jeffersonians and domestic liberals, a smaller US military would be overall beneficial: more money for social programs/less military adventures abroad. For others, a lessening of our international presence will lead us and the world down a potentially dangerous path (great power war, global instability) that will cost us much more than 20% of our budget to get out from under.

I have to admit, though I’m clearly in the ‘US military and global presence is a source for good’ camp, I have to admit that our modern defense industry is bloated and could use some trimming. Greg Scoblete of Real Clear World rightly points out that overall the US currently finds itself in more sure security surroundings compared to the Cold War, WW II, etc. I believe the US needs a strong presence in East Asia to combat a growing China and keep allies such as Japan, Indonesia, and South Korea secure. The scourge of Islamic terrorism is as real as ever and demands a secure homeland and strong military, diplomatic, and intelligence network in numerous hot spots around the globe to deter and defeat. Global trade, which still depends largely on maritime travel, demands safe passage through the earth’s oceans and seas and there is no better guarantor of that than the US Navy. The Middle East, which includes a menacing regime in Tehran, a Turkey posturing away from the West, a vulnerable ally in Israel, oil supplies and pathways up the wazoo, is cauldron of instability and no one knows where these popular uprisings may lead. I could go on…

So in short, yes, I do think the United States could sustain some cuts in our defense spending, but we have to admit that this will come with some costs. which we must choose wisely. and we must not let these cuts distract us from our real budget calamity, ever expanding entitlement programs. This country and the world need a strong American presence and for this to be maintained now and in the future we need not only a capable military, but a fiscal future that doesn’t look so much like present day Greece.