A healthcare failure could save Obama

September 9, 2009

The rising costs of Medicare and Medicaid threaten to destroy the nation’s fiscal future, but President Obama is pushing for healthcare reform that would increase costs. Instead, he should refocus his presidency on paying down debt.true-national-debt-updated1

America’s obligations over the next 75 years now surpass $62 trillion, up 8 percent since last year. And a new report released today by the Peterson Foundation suggests that total will go even higher if the House’s health care legislation is passed.

(Click table to enlarge in new window)

With today’s pliant bond market, it’s easy to pretend we can have things that can’t be paid for. But that’s the kind of attitude that led California into the fiscal abyss. We have to get serious about bringing our expenses in line with our income. Now.

Unfortunately Republicans and Democrats alike are more concerned with winning elections than passing good public policy. Republicans told us “deficits don’t matter,” signed a prescription drug benefit for Medicare that created a bigger fiscal hole than Social Security, waged two very expensive wars financed with debt, and borrowed to bail out banks.

For their part, Democrats complain about the deficit they “inherited,” then proceed to expand the bailouts, pass hundreds of billions worth of “stimulus,” and try to increase our health care liabilities over and above already unsustainable levels.

Partisan economists on both sides provide intellectual cover for this foolishness, but most Americans know better. They know our spending is unsustainable. They see what’s happened to California and know intuitively that government can’t deliver services it can’t pay for. Not forever.

Unfortunately, and this is what happened to California, the longer we wait to solve our fiscal mess, the more expensive it will be. The more we borrow today, the less we’ll have in the future.

If we wait, by the year 2040, Social Security will have gone from a small surplus as a percent of GDP (0.13 percent) to a substantial deficit (-1.34 percent). Medicare’s hospital insurance plan will have gone from a small deficit (-0.08 percent) to a huge one (-3.23 percent).

The Medicare trustees don’t provide estimates for the shortfalls of the two other Medicare programs, including for prescription drugs since, technically, there’s no shortfall: Congress has promised to fund the programs out of other government revenues.

But at that point there won’t be other revenues to spare. If nothing changes, by 2040, income taxes will be enough to cover only Social Security and interest on debt. National defense, education, Medicare, and everything else will all be unfundable. At that point income taxes would have to be doubled to put us back on a sustainable path.

But we won’t get that far. Long before most economists care to admit, foreign lenders will decide it’s no longer prudent to buy our bonds. That will be enough to cause interest rates to rise, hammering asset values and forcing the economy into a far deeper contraction.

The good news is that this problem can be solved a lot less painlessly if we confront it today. Unlike publicly-held debt, the unfunded obligations of Medicare and Social Security are promises that can be taken back.

So instead of making new promises he can’t pay for, Obama should co-opt the Republican platform of fiscal restraint. That worked pretty well for Bill Clinton after his own health care proposal died. By the end of his presidency, we were running substantial surpluses for the first time in generations. That’s the kind of change that overindulged Americans truly need.

But don’t expect that to happen. Obama and the Democrats will push some sort of health reform through Congress. Then they’ll congratulate themselves for expanding coverage — for getting more passengers on board a Titanic healthcare system that’s heading straight for an iceberg.


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God warned against debt, interest, insurance and seeking riches and honor. We are using all three to solve our financial crisis and that will mean our whole polluting lifestyle will continue destroying our health and our planet. THEN we use HEALTH CARE REFORM that will not take away our polluting lifestyle or lower the cost of medicine and doctors; it only changes who we must give our insurance premiums to. Neither does it lead us to a garden paradise lifestyle where we can rest with our families and put in a garden with a few fruit trees, have a goat and a few chickens for fresh foods to be healthy and truly free.The garden paradise lifestyle solves the world problems we created by ignoring God’s secular wisdom. We can solve those problems easily, quickly, fairly, inexpensively and beautifully; the garden paradise lifestyle is the only sustainable development. With so many unemployed and our financial problems at a peak, this is a great time to turn toward God’s easy plan.

Posted by Marie Devine | Report as abusive

These things will help us see why President Obama and the Democrats are so blinded:Twitter:Sending: Psychopolitics-Communist Address of Health Care and Control. “Soviet Art of Brain Washing” http://www.divine-way.comTwitter:Sending “45 Communist Goals For Take Over Of America.” 1963 Congress reviewed goals almost completed http://www.divine-way.comThe Communist teacher said the great danger that could stop the Communist plan to rule through the health care plan was faith healing from the Bible and it must be discredited and wiped out. It is dangerous to their control plan because faith healing works. Mr. Beria was addressing American students at Lenin University before the course on PSYCHO-POLITICS.PSYCHOPOLITICS – the art andscience of asserting and maintain-ing dominion over the thoughts andloyalties of individuals, officers,bureaus, and masses, and the ef-fecting of the conquest of enemynations through “mental healing.”Link: Video: Obama’s Communist Influences: Youtubehttp://rightsoup.com/right-sighti ngs-20/Communist Ties Behind B. Obama – David Simon Canter, Don Rose, David Axelrod & Rham Emanuelhttp:// ggers/2121712/posts

Posted by Marie Devine | Report as abusive

It is so wonderfully easy for the “right” to demonize everything Obama does. Wouldn’t it be nice to have the trillions spent on the wars that they failed at to take care of our own people? In eight year of control the Republicans did nothing on health care. They hate the idea of helping poor people, because they in their hearts believe poor people are lazy and deserve what they get. Here is my prediction, those so many who are poor will rise up one day and take what they need to sustain themselves. But when you listen to the wing nuts on FOX News, revolt is what they want… I just really don’t think they get what the out come will mean.

Posted by Johnnymustardseed | Report as abusive

Speaking of Obama and health care, Barry Ritholtz had a great piece today on how the administration wasted a once-in-a-lifetime opportunity to push financial reform, by going after health care instead.Then again, I have a feeling that the financial crisis will be back soon . . .

Posted by Rob Randhava | Report as abusive

Johnny Mustardseed:I seem to recall something like this… USSR mayhaps?I love all the “They”s flying around. “They” want to steal our money and give it away. “They” watch poor people die for fun. Blah blah blah.Bush spent billions of $$ on wars that a democratic congress voted to give him. Sounds like a bipartisan effort to me! But let’s not allow facts and reason to get in the way of our political self righteous rage.

Posted by Andrew | Report as abusive

“Republicans told us “deficits don’t matter,” signed a prescription drug benefit for Medicare that created a bigger fiscal hole than Social Security, waged two very expensive wars financed with debt, and borrowed to bail out banks.””For their part, Democrats complain about the deficit they “inherited,” then proceed to expand the bailouts, pass hundreds of billions worth of “stimulus,” and try to increase our health care liabilities over and above already unsustainable levels.”You weakened your overall above point by leaving out Afghanistan under the now-democrat column.

Posted by dom youngross | Report as abusive

Andrew,Seems to me Bush had Colin Powell in front of the UN showing “Top Secret” pictures of WMD’S. You are going to blame a Democrat for voting for that LIE? Bush lied and millions died.Doing something about health care is not what Republicans care about unless they lose their jobs and then when Cobra runs out they will care

Posted by Johnnymustardseed | Report as abusive

LOL… at that time, Congress was actually republican controlled, so you missed you chance completely there.Regardless, at that point “everyone” KNEW Iraq had WMD’s… even people against the war. EVEN THE FRENCH, and they weren’t basing there thoughts on Bush. Revisionist history is a crutch for the weakThat’s beyond the point, however, as even once it became clear there were no WMD’s, the democrats kept approving the funding that Bush asked for.Bi-partisan.What party controlled Congress when it voted for the deficit spending Bush signed (most of the time)?Bi-partisan.Two parties.

Posted by Andrew | Report as abusive

AndrewWould you rather spend two trillion on a war or health care for American?No one in this great country should die because the have no health care and no one should go bankrupt because they get sick.Did I miss something or did Republicans do nothing when they were in charge and now they want to do nothing again.What if we found the 2 trillion the FED gave somebody in October of 2008 and refuse to say who they gave it to and pay for healthcare?JPMorgan Chairman and CEO Jamie Dimon, in a letter to shareholders, touched on a theme that critics of the Iraq war were highlighting more than a year ago: That spending on the war was damaging to the economy.Dimon cited “an expensive war in Iraq” as one of the triggers of the economic collapse. Spending on the war ballooned the deficit and crowded out investment in domestic priorities.HMMMMM

Posted by Johnnymustardseed | Report as abusive

Ok, you’re trying to throw up straw men. The two parties shared power for 6 years of the 8 Bush years. Since a Democrat congress had to pass EVERYTHING Bush signed into law, you can’t say “The Republicans did <insert here”. Since Bush had to sign everything that Congress passed for it to become law, the Republicans can’t say “The Democrats did “.Second, no one NOW dies because they have no healthcare. Hospitals are not allowed to deny treatment. So that’s just a cheap play on emotions, but ultimately not a valid argument.Unless you are arguing we should be providing healthcare in a foreign country.Third, if you want help paying for your medical bills, ask me for help. Don’t demand that I hand over money because you think I owe it to you. Hospitals and doctors donate millions of hours and hundreds of millions of dollars every yearFinally, when someone argues that the gov’t needs to, essentially, make charity compulsory: this person advocating this gov’t activity… how much money/time do they donate to this charitable cause now? If you’re in favor of subsidized healthcare and you don’t donate any of your own money to medical charities now… why do you have any stage to stand on?

Posted by Andrew | Report as abusive

[…] with any proposal at this time (one being the financial costs, but the other being politics). Rolfe Winkler details: America’s obligations over the next 75 years now surpass $62 trillion, up 8 percent […]

Posted by Photomaniacal &raquo; Blog Archive &raquo; The Costs of Health Care | Report as abusive

It is refreshing to note that there are still people like Rolf who can see things for what they are and not be influenced by totally irrational thinking! Neither the Democrats nor the Republicans have the integrity to tell the truth and face the facts, but are quite content to argue and bicker over all sorts of costly issues, the debt involved being of absolutely no consequence whatsoever, because there is no intention of paying it back, so they all enjoy the enviable position of doing what they like without any threat of retribution or penalty, merrily continuing on their way to what they firmly believe to be immortality and worship!What this planet’s leaders lack is true integrity and a realization of what true value is, but there are none of those in power right now. We are all very much mistaken if we assume for one moment that the leaders whom we put into power really care one iota about us – power, greed and self glorification has destroyed their thinking totally and as a matter of course will destroy them all as well! The time to wake up is long gone and all this useless debate is exactly that -Fruitless and useless! The next recession may be nearer than we think – but that is no problem – we can just borrow our way out of that too since we do not have to pay the debt anyway! We are thinking like so called 3rd world countries and banana republics – I wonder why that is?All my life I was taught and led to believe that if you could’nt repay a debt then you should not create one. What a pity I was brought up to believe such nonsense.That of course is the secret to success!We live in fear of what exactly? We hunger for more of what exactly? We need more power in order to allay our fears and satisfy our greed and we need to immortalize ourselves as super hero’s in order to compensate for what we actually see when we look in the mirror each day! I shut my eyes in shame often and feel sure that there should be many others doing the same!

Posted by pete | Report as abusive

Health care reform is needed. If each and everyone of the american people lose their job or their company stops offering healthcare. What are you going to do especially if you have a pre-existing condition? Most insurance companies do not treat pre-existing health conditions right away. If you have a gap in coverage then you will not get coverage for at least a year for that condition. You could die if you need test or medicines. So has anyone thought about the fact that companies could stop paying or offering insurance or at least change the way they offer it? I have and I have friends that have. It is not pleasant. So becareful what you say. It may happen to you and then you go broke trying to get health.

Posted by Annette Rusher | Report as abusive

Sorry you are wrong. People do die, Republicans were in charge and did nothing on health care. 20% yearly increases in insurance premiums is unsustainable. You obviously have yours paid by someone else… Lucky you.18,000 deaths blamed on lack of insuranceBy Steve Sternberg, USA TODAYWASHINGTON — More than 18,000 adults in the USA die each year because they are uninsured and can’t get proper health care, researchers report in a landmark study released Tuesday.The 193-page report, “Care Without Coverage: Too Little, Too Late,” examines the plight of 30 million — one in seven — working-age Americans whose employers don’t provide insurance and who don’t qualify for government medical care.About 10 million children lack insurance; elderly Americans are covered by Medicare.It is the second in a planned series of six reports by the Institute of Medicine (IOM) examining the impact of the nation’s fragmented health system. The IOM is a non-profit organization of experts that advises Congress on health issues.Overall, the researchers say, 18,314 people die in the USA each year because they lack preventive services, a timely diagnosis or appropriate care.The estimated death toll includes about 1,400 people with high blood pressure, 400 to 600 with breast cancer and 1,500 diagnosed with HIV.”Our purpose is simply to deliver the facts, and the facts are unequivocal,” says Reed Tuckson, an author of the report and vice president for consumer health at UnitedHealth Group in Minnetonka, Minn.

Posted by Johnnymustardseed | Report as abusive

ok… obviously you aren’t going to let anything get in the way of your agenda of blaming the republicans for everything and placing the democrats on a podium.

Posted by Andrew | Report as abusive

Assume that all 18,000 would have lived if they had coverage (a rediculous assumption given the nature of disease, genetic problems, and people’s lack of timeliness going to the doctor even when they have coverage).That would average out to an additional deficit cost of $1.2 million per person PER YEAR, using the CBO estimate.I guess I’m cold hearted, but it’s not worth it. I couldn’t even honestly justify asking the public to pay $1.2 million a year to keep me alive.

Posted by Andrew | Report as abusive

I find it amusing that the same people who took out mortgages they can’t afford are now demanding the government implement a program that it can’t afford, on top of programs they can’t afford. As Zathras said, “At least there is symmetry.”Also well played is the “Balance of Power” illusion, with the “Democrats” placing blame at the feet of the “Republicans”, and vice-versa, with their various minions on each side buying in to and acting upon the rhetoric. Smart people would notice this, and realize they are being played by both sides to their own loss. Such is politics, and such is the game of the something-for-nothing crowd when they’re prowling for a piece of someone else’s pie. We have become a true democracy. All democracies fail when the majority discover they can write a check for themselves from the public coffers. This, of course, is contrasted with what America should be – a Republic – where the rights of the individual are protected from the whim of the majority.Mr. Winkler has it right – the fall will occur sooner, and much more dramatically, then simply going until we run out of checks in the check books. We are off the cliff already. As “they” say, its not the fall that kills you – its the sudden stop at the bottom.The only real question left now – Reform? Or revolt?

Posted by Riplakish | Report as abusive

Andrew,It is always easy to argue for no change if your life has not been affected by health issues. I pay $20,000 a year for basic coverage on my own. Maybe your situation is different and you do not think that is crazy, so then god bless you for your sucess. I think that is absurd and you wouldn’t be so cold hearted if it was someone in your family that was a faceless statistic you would let die. Remember sir you are only one misfortune away from being one of those faceless.

Posted by Johnnymustardseed | Report as abusive

Perhaps if companies start reimbursing their employees for their gasoline expenses, 80% would say they were okay with $4 gallon gas too. These statistics can be deceiving.

Posted by BobP | Report as abusive

The only affordable solution to America’s medical issues is a Single Payer system. This would never happen because public policy is dominated by the medical and insurance industries. The current system as proposes is a poor comprimise and its best that it fails. Single Payer is the only way out of this mess. Just imagine what could be done with the money saved on administration and insurance costs in the US system. Is it any wonder no one wants to build things in the US with its out of control medical costs? Did you know that it costs 4000 dollars more to build a car in the US (due to medical costs the employer pays) than Canada, even with the wage parity that exists between the two nations?

Posted by David | Report as abusive

There is no hope for America. We might as well tuck our heads between our legs and kiss our sorry butts goodbye. The people to blame for all this are the dumb American voters who can’t seem to vote for anyone besides a Democrat or a Republican. They whine and cry about the high cost of healthcare, then vote like they always vote, and then stand around with their thumbs up their posteriors wondering why nothing seems to get better. Well, folks, as long as the Democrats and Republicans run the country nothing, and I mean nothing, is ever going to get any better. I’ll wager a bet on that.

Posted by Mufaso | Report as abusive

In Canada, the Liberal Party has effectively held power for 3/4 of a century. All was built on one large credit card.Unfortunately, paying down the debt does not get the great headlines as for example, “Liberals commit $4 billion to this” or “Liberals give $500 million to that”, which is splashed across our local paper almost every other day and is mainly how this government has effectively ruled.On the other hand, our Conservative government spent our surplus ($5 to $15 billion) paying down the debt and many average Canadians quickly forget. Blaming the current government as doing nothing for them.Spending announcements receive big headlines and.

Posted by Drew | Report as abusive

We now face and have faced for the past 20 years a dearth of leadership. We have no leadership in the Congress, nor in the Presidency. It is all talk. How we got there is by Political parties manufacturing candidates instead of seeking them out from proven business and civic leaders. It is sad how the same old retreads go back into Washington law firms and are hired to run businesses that suck business from the Government(Dick Cheney. Kind of reminds me of second generation preachers who are not called, but really can’t do anything else.

Posted by f belz | Report as abusive

Failure of these health care bills may save Obama, but it won’t save Nancy Pelosi. Obama would probably be a much better president with a Republican congress, just as Clinton was.

Posted by Andrew P | Report as abusive

[…] problems. First, the argument ignores tens of trillions of unfunded obligations for Medicare and Social Security, debt Krugman loudly lamented in his 2003 […]

Posted by Krugman and the pied pipers of debt | oolaah | Report as abusive

Do every one of these blog/articles have to boil down toDemocrats Vs Republican rumbles? Seriously is it simply easier to point at the other party and scream as we all swirl down the toilet bowl together? There is another party out there my friendsGive me control of a nation’s money supply and I care not who makes its laws.RothchildRepublicans/Democrats? LOL they control NOTHING

Posted by Ritual | Report as abusive

[…] with any proposal at this time (one being the financial costs, but the other being politics). Rolfe Winkler details: America’s obligations over the next 75 years now surpass $62 trillion, up 8 percent […]

Posted by The Costs of Health Care | Daily Finance News &#8211; Forex Stock Market | Report as abusive