You may have seen the headline: “DIRE FORECAST SPARKS NEW MEDICARE DEBATE TRUSTEES' REPORT USED AS FODDER FOR POLITICAL SALVOS BY BOTH SIDES,” but the date may come as a surprise: June 6, 1996.
At the time, the Chicago Tribune warned its readers: “Medicare trustees reported Wednesday that the program's financial outlook is getting worse, touching off a new round of debate over the future of the federal health insurance system for the elderly and disabled. According to the trustees, who give the program a fiscal checkup every year, the fund that pays Medicare hospital bills dipped into the red last year and will go broke in early 2001. That's a year earlier than they predicted in 1995.”
Sound familiar? How about these warnings:
Chicago Tribune July 2, 1969: “The Medicare hospital trust fund faces bankruptcy by 1976 and taxes must either be raised or benefits reduced the senate finance committee was told today.”
Washington Post, April 1, 1986: “The Medicare hospital insurance program faces bankruptcy by 1996, two years earlier than projected last year.”
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.
(Hat tip to Chicago Tribune columnist Eric Zorn who culled eighteen stories from the Tribune, the Washington Post and the New York Times over a period of four decades, each predicting that the Medicare Hospital Insurance Fund was teetering on the brink of disaster.)
But of course Medicare didn’t “run out of money” in 1994, and it won’t go belly-up now, in large part thanks to health care reform legislation. According to the Congressional Budget Office (CBO), the Affordable Care Act (ACA) raises and saves over $950 billion. (Below, I spell out how the legislation generates those dollars). In the process, as the Medicare Trustees’ Report 2011 points out, the ACA reduces Medicare spending “by 25 percent”—without cutting health benefits, or shifting costs to seniors.
More changes will be needed, but Zorn is relatively optimistic. After citing the many times we have been told that Medicare is careening toward bankruptcy, he recalls the story of “The Boy Who Cried Wolf.” Zorn acknowledges that “just because officials and politicians have been predicting Medicare's imminent bankruptcy for more than 40 years doesn't mean that one day they won't be right, but, more likely,” he suggests, “we will turn the knobs and twiddle the dials in order to keep the overwhelmingly popular program solvent, but not so solvent that, between five and 12 years from now, another set of politicians won't grimly inform us that it's going under in between five and 12 years.”
Sample of the verbal compost:
Visit msnbc.com for breaking news, world news, and news about the economy
The Village consensus is that Medicare must be cut and that Democrats are using the same old "scare tactics" by telling their constituents that such cuts will affect their lives. (None of the people in that roundtable need to worry about such things themselves, of course. They are all wealthy celebrities who will be just fine.)
Gregory: So, Ruth Marcus, what wins here, bold leadership on Medicare and the argument that the Democrats won't do something courageous or the Democrats who say, hey, those guys want to take away my medicare?
Marcus: I regret to inform you that I think it's the latter. And I think when you were asking Senator Mcconnell if medicare was the new third rail of American politics, I think the question was wrong in a sense, because it's the old third rail of American politics.
This play has been run time after time. If you go back and look at the quotes from president Clinton, back when he needed to win re-election, they sound a lot like the quotes from Democrats today about don't let those republicans take away your Medicare. The difference is that the debt is bigger, the deficit is bigger, the gap is bigger, and the situation is more dire. but i think that, sadly, the lesson of New York 26 is Mediscare works.
Gregory: The question, David Brooks, is whether there is going to be a deal before they raise the debt ceiling on medicare and what that looks like. Senator McConnell wouldn't say it, but he's certainly not backing the Ryan plan. he's not going to go to the map. if you don't whip up the vote in the senate, that's not going to the mat. it's letting your members vote. it would be something different than what Ryan is talking about.
Brooks: Right. If you ask Americans, should we cut Medicare to help end and reduce the deficit, 70% say no. So that's pretty strong. That's what happened in New York 26.
I agree with Ruth's analysis on that. So, what do Republicans like Mitch McConnell do? They can do a couple things. one of the things that would be useful is to cut a deal that includes Medicare, to have dramatic fingerprints on a Medicare reduction plan, which would be good for the country.
And by getting the Democrats involved, then that would reduce that as an issue. Then what they have to offer is tax increases on the rich. now, would the Democrats take that up? I'm not sure. and frankly, I don't think it's likely, but that's what the Republicans need. [oy vey...]
I think it's much more likely that we'll have really a fudge deal on the debt ceiling, a deal of a government shutdown problem this year and a very large chance of some sort of fiscal crack-up within the next couple years.
I was up on Wall Street this week. I know more about political risk than they do. They are vastly underestimating the source of political risk here. We could have a major problem, I think, either this summer or the next couple of years, and I'd be worried about investing too much in the market. That's my financial advice.
Marcus: Luckily, the market's closed.
Gregory: Harold, what about the issue of timidity? It's ironic that what Newt Gingrich said out loud on this program about right-wing social engineering and don't do the Ryan plan is what a lot of republicans were saying privately, of course. then here's Bill Clinton giving ammunition to the Republicans by saying to the Democrats, don't be timid here. Don't go to the old, you know, Mediscare tactics. Do something courageous. Is that going to happen?
Ford: I hope. The efforts under way by Joe Biden, by the great vice president, defined some compromise.Oi'm a believer after watching President Clinton in the last few days that perhaps if they get close to a deal, President Obama might ask President Clinton to come back in and convince some of the Democrats that this is the right thing to do. I was most encouraged, though, by McConnell this morning. He backed away from standing so firm and steadfast with Ryan, suggesting strongly that he's ready for a deal, and even listening to Chuck Schumer this morning. He talked with more specificity about where they would go. So, it's obvious we're moving in a direction where Democrats a few weeks ago said no Medicare.