When I remarked on the Social Security Trustees’ report, I didn’t mention what they had to say about the Medicare Trust Fund which if anything is in worse shape than that of the Social Security Trust Fund as the editors of the Wall Street Journal do not hesitate to report:
Don’t shoot the messenger, but the Trustees project that the Medicare hospital trust fund will run dry in 2026.
Five years is not a lot of time but, fortunately, it’s not in a presidential election year which suggests the Congress will wait until the wolf is actually at the door before doing anything about it. The editors also don’t hesitate to point out the irony of the Congressional Democrats striving to broaden Medicare even as it faces insolvency:
Democrats won’t mention any of this as they try to add vision, dental and hearing benefits to Medicare and lower the qualifying age to 60 from 65.
I think I disagree with this observation:
The Medicare Trustees note that their forecast doesn’t take “into account the potential effects of sustained slower payment increases on provider participation, beneficiary access to care, quality of services, and other factors.†Translation: Many doctors won’t take Medicare patients because stingy government payment rates don’t cover their costs. The feds may soon have to pay providers more to ensure Medicare patients can get care.
As of today more than 90% of physicians take Medicare and most of those who don’t are either shrinks or plastic surgeons. I don’t believe the numbers add up to support their claim. Medicare, Medicaid, and a variety of other government programs account for something between 40% and 60% of all healthcare revenue, depending on how you calculate and whom you ask. I find the notion that physicians will cut off their noses to spite their faces unlikely. What I think is more likely is that physicians will mobilize to persuade the Congress to rescue Medicare.
When push comes to shove, Congress will bail out Medicare and Medicaid with borrowed money. The pattern is now established.
Whether foreigners will buy the T-bills is another matter. The Fed might have to do that.
Bob’s right, and there’s worse.
Nobody even worries about it. It’s taken for granted that credit is unlimited and benefits will never be cut. And they’re right about that.
It’s why I believe the Federal debt will be monetized.
Federal money managers and politicians are backed into a corner.