Medicare Trust Funding Accounting: Double Your Fiscal Trouble

Anyone who is still uncertain about whether the Obama administration is double counting when it claims that ObamaCare both funds new insurance benefits and extends the life of Medicare should check out video of the Medicare panel held at the American Enterprise Institute earlier this week. Asked about the claim, Medicare's Chief Acturary, Richard Foster, says that he’ll try to describe how the relevant revenue and spending process will work and then let people judge for themselves (clip starts around the 1:53 mark). Here’s how Foster explains the process:

To use a simplified example, let’s say you as an individual have to pay an extra $100 in hospital insurance payroll taxes because of the Affordable Care Act. So an extra $100 in actual cash comes from you to the Treasury and it’s credited to the Hospital Insurance Trust Fund. We get a bond of $100 for it. The cash itself is still sitting there and it will be spent like that [makes a motion that indicates "very quickly"]. Money does not sit around long in the Treasury. It may well be spent to help pay for other Affordable Care Act provisions or anything else that it needs to be spent on. So your $100 is spent.

But I have a promise for the Hospital Insurance trust fund that any time I need that money back I can get it. So let’s say it was spent for other coverage expansions, and now three years later I need it back to help pay for hospital insurance costs. So I let Treasury know. They come up with $100 in cash plus the five dollars in interest they owe or whatever it might be and they give me that cash and I spend it.

So far we’ve had a need for $200—$100 for the coverage expansion and $100 for HI [the Hospital Insurance fund]. We spent $200. And I got my money back. But you only paid $100.

When I got my money back, Treasury had to raise that money some other way.  They’d already spent your $100. And they had to raise it by further borrowing, or not spending some other $100, or raising a new tax for $100. So on the one hand, all this is nothing new. This is traditional trust fund accounting. It’s just the way it works through the lending and redeeming operation. On the other hand, if you’re going to spend $200, you need $200.

It’s an accounting methodology, in other words, that allows the government to collect $100, then spend it twice. It’s double counting, regardless of how many times Health and Human Services Director Kathleen Sebelius and other Obama administration flacks try to claim otherwise.

The last part of Foster’s explanation is also important to note. It’s not just that traditional trust fund accounting is inaccurate. It’s that, by giving the government license to spend tax money twice, it frequently paves the way for more borrowing, higher taxes, and unplanned service cuts.

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  • Max||

    Go fuck yourself, Suderman.

  • Max||

    That's it Max I'm done posting here! Asshole!

  • Max||

    Stop spoofing me. I swear to god I'll quit posting if you don't! Assholes!

  • Max||

    I'm sucking Ron Paul's cock if you don't stop spohfing me fuckers!

  • Max||

    That's not funny you assholes! You know I would never blow a libertardian!

  • Max||

    Does fucking yourself count as one or two fucks?

  • Max||

    That's not funny you miserable fucks! THAT'S IT I'M DONE HERE!

  • Max||

    ARFARFARFARFARFARFARFARFARFARFARF!!!!!!!!!!

  • Max||

    Go fuck yourself you libertoid cock sucking assholes! You won't have me to kick around anymore!

  • NoVAHockey||

    I think you're missing a first reference to CMS' Richard Foster.

  • Alt Text||

    Smell my moustache Mr. President!

  • P Ubes||

    I think she shaves

  • Almanian||

    "Smells like......victory..."

  • ||

    Spending the same money twice? Why stop there? We could pay off all the debt in the world, and we'd only have to re-spend the same $100 a couple trillion times. Then we use the remainder to buy a perpetual motion machine.

    You're welcome, Mankind.

  • ||

    So how is this way of funding different than the current way of funding Medicare?

  • L4F||

    Did he just kissed that woman? Where's the media? Billy the horny hillbilly Clinton gave Monica a hug and the media kept running that. Damn Obama commits adultery and nobody says nothing?

    http://libertarians4freedom.blogspot.com/

  • tarran||

    Wow! Didn't the justice department charge Arthur Andersen Inc. with a crime for signing off on that kind of accounting?

  • ||

    inherent evilness is a paramount consideration in the legality of such accounting.

  • Max||

    Only a tard couldnt see the difference

  • Max||

    Fuck off Max! I thought Max was done posting here Max!

  • LarryA||

    To use a simplified example, let’s say you as an individual have to pay an extra $100 in hospital insurance payroll taxes because of the Affordable Care Act.

    If I end up on the hook for an extra $100 now and another extra $100 later, how the hell is this the "Affordable Care Act?"

    We are so screwed.

  • Mr Whipple||

    He's thinking, "MILF"

  • Max||

    Its not double counting assholed

    Learn fucking acctg

  • Max||

    Yeah you fucks. What Max said! Learn accc thunk. Ignint assholes!

  • insurance.comparisons.org ||

    He seemed to be serious about producing good numbers for his programs. It's extraordinarily dismaying to see his Health and Human Services Secretary so firmly committed to making obviously misleading claims about his largest achievement quote.

  • ||

    I think one of the hardest parts is finding the right medicare plan. I have been doing research for the last few months. I just wanted to make sure I was making the right decision. Recently I came across this site medicare . It does a great job matching you up with the right plan. After trying different sites this is the best one that I've encountered. Very user friendly.

  • ||

    If your going to have Medicare Supplemental Insurance you should think about what you value most in your health insurance to find the plan that fits your needs the best.

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