Medicare Finances in Dire Condition

Published July 1, 2007

The law that gave us Medicare prescription drugs says if Medicare’s finances deteriorate sufficiently, the president must propose a remedy and Congress must expedite its consideration. In releasing its annual report in early May, the Medicare Trustees announced this financial “trigger” has been hit.

Things are very dire. Once the Baby Boomers begin to retire, the federal government will face a cash-flow nightmare:

  • In five years, the government will have to stop doing one in every 10 non-entitlement things it has been doing, in order to keep its promises to the elderly.
  • In 13 years, the government will have to stop doing one in every four things it currently does.

This forecast does not even include the impact Baby Boomers will have on Medicaid, which is almost as big as Medicare.

Buried Story

All of this is spelled out in a terrific editorial by Professor Thomas Saving in the May 9 issue of The Wall Street Journal. Read it carefully, because you are unlikely to read about this problem anywhere else.

In its story about the Trustees Report, The New York Times mentioned the “trigger” in paragraph 14, while The Washington Post buried it in paragraph nine.

One place the point has not been missed is on The New York Times‘ editorial page, which rarely passes up any occasion to undermine efforts to bring the facts to light.

The Times editorial lamented the fact that a trigger even exists: Why get distracted by cash flow deficits when the obvious solution–after we run out of IOUs–to this and all other financial problems is to tax the rich?

John Goodman ([email protected]) is founder and president of the National Center for Policy Analysis in Dallas.

For more information …

“Medicare Meltdown” by Tom Saving, The Wall Street Journal, May 9, 2007,