Nearly 15 years ago, Barack Obama attempted to garner support for Obamacare by emphasizing the dire consequences if no action was taken regarding our healthcare system. A decade and a half later, largely due to Obama’s healthcare law, we find ourselves in a position where “nothing” significant is being done about some of our nation’s most pressing fiscal problems.
Obamacare failed to address the fiscal challenges tied to the retirement of the Baby Boom generation. In fact, the law has allowed lawmakers and presidents to sidestep these issues for almost two decades. This has merely deferred our fiscal reckoning, making the inevitable adjustment even more painful when it arrives.
Trust Fund Gimmicks
Back in 2009, just before Obamacare was enacted, Medicare’s trustees reported that the program would be insolvent by 2017. However, after the law was passed, the 2010 trustees report pushed the insolvency date to 2029, suggesting a 12-year improvement. Additionally, the report reduced the unfunded obligations of the Medicare Hospital Insurance Trust Fund from $13.4 trillion to $2.4 trillion over 75 years—an over 82 percent reduction.
Did Obamacare truly enhance Medicare’s finances dramatically? In short, no. Every dollar claimed to extend the life of the Medicare trust fund was also used to fund Obamacare. This was confirmed by then-Secretary of Health and Human Services Kathleen Sebelius in her testimony before Congress:
Obamacare only improved Medicare’s finances on paper. In reality, the program likely became functionally insolvent years ago. The budget gimmick allowing the same funds to be counted for both Obamacare and extending Medicare’s life is the only thing keeping the latter program afloat.
This scenario should shape how readers view the news that the most recent trustees’ report has delayed Medicare’s insolvency to 2036. While the report suggests some financial improvements, it also gives politicians an excuse to avoid the tough decisions needed to keep the program solvent in the long run.
Need for a Forcing Mechanism
In past years, lawmakers recognized the necessity of mechanisms to compel legislative action on deficits and debt, lest politicians shy away from looming issues until it was too late. Consider these quotes:
- This amendment “is designed … to immediately focus our attention next year … at the most critical time attention should be focused on taking on the tough measures. And that is when you have to raise the debt ceiling again. My mother says there is nothing like looking over the precipice to focus one’s attention.”
- This amendment “will provide the incentive to act next spring. It will do so because it says we cannot increase the debt limit again until we have acted on a budget freeze.”
- “I cannot agree to vote for a full increase in the debt without any assurance that steps will be taken early next year to reduce the alarming increase in the deficits and the debt.”
These quotes are from none other than Sen. Joe Biden, nearly 40 years ago. During a Senate debate on raising the debt limit in the fall of 1984, Biden supported an amendment requiring Congress to act on freezing all federal spending (including Social Security and Medicare). When the Senate did not pass the amendment, Biden voted against raising the debt limit because it did not address Medicare and Social Security spending.
The Biden of 1984 understood the need for lawmakers to hold themselves accountable and face fiscal challenges head-on. Unfortunately, four decades later, this perspective appears to have been lost, with Biden using Obamacare’s fiscal gimmicks—which concealed but did not solve Medicare’s deficits—as a reason to avoid making tough decisions.
While Medicare and Social Security are not the sole contributors to our nation’s financial issues, trillions in welfare benefits and fraudulent spending during the Covid pandemic have exacerbated the situation, particularly with rising interest rates increasing our debt service costs.
No comprehensive fiscal solution can sidestep Medicare and Social Security. The more politicians employ gimmicks and avoid the obvious issues, the more dire the future will be for our children and grandchildren.
