Trusting trust funds

This week, trustees of Social Security System and Medicare released their projections on the future fiscal status of the funds. Social Security trustees said the trust fund would be exhausted in 2042 (the same as last year), but Medicare trustees projected that their insurance trust fund would be depleted by 2019 - seven years earlier than last year.

This lead to the usual horrified gasps of the right-wing doomsayers and renewed calls for privatizing the whole shebang. However, their wide-eyed, finger-jabbing, ashen-faced expressions of phony dismay don't add up. Social Security first:

Fist and most important is that despite what the headlines say, Social Security is in no danger of going "bankrupt" in 2042. Social Security right now has a surplus. In a few years, the system is going to have to start dipping into that surplus to pay full benefits. By 2042, by current predictions, the surplus will be gone and the system will go into the red. I repeat - into the red. It will have to borrow to meet commitments. It will not bankrupt. (Sidebar: For accuracy, I should say that in a technical sense it would be "bankrupt," or, more accurately, in default, because its obligations would exceed its assets - but you know damn well that's not what most of us think of when we hear "bankrupt" and it's not what the wingnuts want us to think, either.)

Even at that, current levels of Social Security tax revenue would be enough to finance benefits at 70% of current levels through 2078, which is as far out as the trustees try to project. That, I emphasize, is with no changes at all to the system. With just minor changes the problem disappears. (One change I'd strongly recommend is stop pretending Social Security is some sort of government-enforced IRA but is rather a social insurance program - and then eliminating the income ceiling on which SS taxes are levied, a limit which would no longer have any logic to it. Why should, say, Bill Gates pay no more in such taxes than someone earning $90,000 a year?)

There is no Social Security crisis. Period.

Medicare is trickier, but, as Paul Krugman notes in his March 26 column,

[e]ven on Medicare, don't panic. It's not like a private health plan that will go belly up when it runs out of money; it's just a government program, albeit one supported by a dedicated tax. Nobody thinks America's highways will be doomed if the gasoline tax, which currently pays for highway maintenance, falls short of the system's needs - if politicians want to sustain the system, they will. The same is true of Medicare.

More tellingly, Krugman explores how appeals to "the magic of the market" have been exploited to force Medicare to adopt per-person fees to HMOs that accept Medicare recipients rather than the traditional payments to doctors and hospitals for services rendered.

The predictable outcome was that HMOs wanted to accept only healthy recipients, leaving those most in need of care with even fewer resources than they had before - but Medicare wound up paying the HMOs slightly more per person than it had under the old scheme. The result, that is, was increased costs for the public and fewer options for the sick. Fortunately for health care availability, many HMOs later pulled out of the scheme: It seems private health plans, working in the "magical marketplace," have such high overhead that they can't compete with traditional Medicare, even with public subsidies.

The effect was large enough that of the seven years cut off of Medicare's financial stability, two could be traced directly to such increased subsidies.

So of course with the prescription drug bill, they did it all over again, turning it into a cash cow for private insurers. And when the result of that is to further damage Medicare's long-range outlook, the cries to "privatize" the "inefficient" federal "bureaucracy" will get even louder. It's almost like it was done on purpose.

There is one other thing to be mentioned here, which is too big a topic to get into right now, but is very relevant. All the problems of Medicare (and Medicaid) result from one central fact: our insistence on maintaining the fantasy that a private, for-profit health care system is the best engine for delivering and protecting the human right to decent, humane, adequate health care. It's not. At some point we have to stop talking about tinkering with how we subsidize a private system and start talking about a publicly-funded, publicly-directed system - that is, we have to start talking seriously about a single-payer, not-for-profit, national health care system. Until we do, we'll keep on chasing crises.