Eric Zorn of the Chicago Tribune digs into the historical predictions of Medicare’s demise. Suffice it to say, Medicare’s death has been greatly exaggerated. Repeatedly.
New York Times July 7, 1981: Medicare payroll taxes already imposed by Congress, including two increases scheduled for 1985 and 1986, will only be able to keep the hospital insurance system solvent for eight to 10 more years, three Cabinet officers informed Congress. Even under the Reagan Administration’s highly optimistic economic projections, the fund will be bankrupt before 2000, the three said.
Washington Post,March 6, 1983: Senate Budget Committee Chairman Pete Domenici warned the nation’s governors the other day, “Medicare can be bankrupt in 2 1/2 years,” unless some way is found to put the brakes on its burgeoning costs.
Chicago Tribune: June 25, 1983: Medicare is in danger of bankruptcy as early as 1986, the system’s trustees declared Friday.
Chicago Tribune, March 10 1984: To avert Medicare’s expected insolvency, a federal advisory council proposed Friday raising the eligibility age to 67, taxing employer paid health insurance benefits and boosting the tax on alcohol and tobacco… the Congressional Budget Office said Medicare may be insolvent in 1989
New York Times, January 20, 1985: In the last few years, when it appeared that the Medicare trust fund would run out of money in 1987-89… But the need seemed less urgent after the Congressional Budget Office issued new estimates last September indicating that the Medicare trust fund would not go bankrupt until 1994.
Chicago Tribune February 6, 1985: Medicare is still expected to go bankrupt in 1991, and a new flood of red tape is not helping America’s hospitals.
New York Times, March 27, 1985: Reagan Administration officials said tonight that new projections showed the Medicare trust fund would not go bankrupt until late in 1990’s.
Chicago Tribune, Nov. 17 1985: Last spring, the government estimated that the Medicare trust fund would run out of money by 1998. Given less optimistic assumptions about the economy, it could happen as soon as 1992
Washington Post, April 1, 1986: The Medicare hospital insurance program faces bankruptcy by 1996, two years earlier than projected last year.
Chicago Tribune, June 29, 1986: Dr. Jerald Schenken of Omaha, an AMA trustee, said the doctors have worked for more than two years on formulating the plan, because they fear the current Medicare system will go bankrupt by the end of the century.
New York Times, May 22, 1988: Reflecting the view of the Reagan Administration, Dr. William L. Roper, the head of the Federal Medicare and Medicaid agency, said, ”With the Medicare Trust Fund expected to go insolvent shortly after 2000, it is hard for us to sign on for a major expansion of the Medicare program beyond the catastrophic care bill.”
And that’s just the Reagan years.
Keep in mind that, during this period, predictions of the demise of Social Security and Medicare were used to justify increases in payroll taxes. Those increases created a sizable surplus in the Social Security Trust Fund which was raided for general fund expenditures such as tax cuts for the wealthy and some overseas wars. Rather than pay for those things with more progressive income tax revenues, the common wisdom in D.C. is to cut Medicare and Social Security benefits. Bait, meet Switch.
You’re way off base here. The Trust Fund is not the issue. If it was, these programs would already be bankrupt.
These programs are spending at a rate such that the Trust Fund is being quickly emptied. That’s the issue. No amount of “progressive taxation” is going to change that, because we have a spending problem, not a taxing problem.
In fact, we created the Trust Fund in a high interest rate environment. Since we are now redeeming those Trust Fund bonds with new bonding, done at today’s incredibly low interest rate environment (10 year Treasuries are under 3% again, that’s simply incredible), it seems to me that we made out like bandits on the deal. Interest rates in 1981 were high double digits.