Paul Ryan vs. Medicare

The bowhunting congressman from Wisconsin takes on the flailing entitlement program in today's Washington Post:

The annual analysis of Medicare's financial health released by the program's trustees on Aug. 5 led some Democrats to claim that Medicare's imminent bankruptcy has been delayed, thanks to the creation of their health entitlement program. Only in Washington could the government raid one entitlement program to finance a brand-new one and still claim that deficits have been reduced and entitlements have been reformed.

The trustees' report compares the revenue that supports Medicare's trust funds with the program's planned expenditures. Last year's report revealed a $38 trillion shortfall over the next 75 years. This year the shortfall appears to have decreased, but only after the Democrats' health bill cut $529 billion from Medicare. This apparent improvement was the basis for Democratic celebration—even though the program remains tens of trillions of dollars in the hole.

With the same legislation that cut more than half a trillion dollars in Medicare spending, the Democrats created a nearly $1 trillion health-care entitlement. The Obama administration's own chief actuary has explained that in addition to the dubious assumptions on provider cuts and other claims of savings, the health-care law's Medicare cuts cannot be used to both reduce Medicare's unfunded obligations and pay for a new entitlement. And the Congressional Budget Office said in March that the health-care overhaul's Medicare savings "would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future Medicare benefits."

Put simply, Medicare is on course to collapse. Medicare and interest on the national debt alone will soon overwhelm the federal budget, crowding out all other national priorities.

Politically, Ryan's proposed solution—essentially voucherizing the program—is an extremely tough sell (at best). But it's hard to argue with his diagnosis of the problem. Even under the best possible circumstances, Medicare is set to run out of money soon. As this report by the Committee for a Responsible Federal Budget notes, even if you buy the most optimistic assumptions about Medicare, the program is "likely to permanently exceed its dedicated revenue source by the end of the decade." But it's actually much worse than that, because there's no reason at all to buy those assumptions—not when the entitlement's chief actuary has said flatly that those figures "do not represent a reasonable expectation" of the program's future.

I looked at the Medicare Trustees Report here. More on Paul Ryan here and here.