Medicaid
Medicaid is a joint federal-state program that provides medical care to nearly 70 million low-income individuals nationwide. It is a means-tested program that is managed by the states. People served by Medicaid are U.S. citizens or legal permanent residents, including low-income adults, their children, and people with certain disabilities. Medicaid has expanded rapidly since its inception in 1965. This could possibly be linked to the program's financial structure, in which the federal government matches state spending. The incentives are so dysfunctional that states have inflated the cost of health care. • State expenditures on Medicaid have increased from 0.2 percent of tax revenues in 1966 to an estimated 21 percent in 2005. • In 1975, 10 percent of the U.S. population was enrolled in Medicaid, by 2008, 19 percent were enrolled. • In FY 2010, Medicaid surpassed elementary and secondary education as the largest component of total state spending. • ObamaCare will add 18 million people to Medicaid rolls. Even without reform, Medicaid spending may increase by as much as 50 percent in 10 years. This is an unsustainable model. State-by-State Insurance Information is available at this site.
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The Baby Boom and Financial Doom
12/23/12
To rightsize spending, entitlement programs must be reformed.
from TIME Magazine,
12/24/12:

The American left has trained its sights on a new enemy: Pete Peterson.

He stands accused of being the evil genius behind all the forces urging Washington to do something about the national debt. "The Peter G. Peterson Foundation is deficit-scold central," writes columnist Paul Krugman.

But for a deficit scold, Peterson does not seem very concerned about today's budget. "The current deficit is not the problem," he told me recently. "I wouldn't enact any measures to reduce it until the economy recovers properly."

"My overriding concern has always been the long-term outlook, the massive structural deficits that we face as the baby boomers start retiring in large numbers. That's the problem we've simply refused to confront."

The facts are hard to dispute. In 1900, 1 in 25 Americans was over the age of 65. In 2030, just 18 years from now, 1 in 5 Americans will be over 65. We will be a nation that looks like Florida. In 1960 there were about five working Americans for every retiree. By 2025, there will be just over two workers per retiree. In 1975 Social Security, Medicare and Medicaid made up 25% of federal spending. Today they add up to a whopping 40%. And within a decade, these programs will take up over half of all federal outlays.

But we have postponed the problem. The budgetary strains are already apparent. Federal spending on everything other than entitlements and defense has been steadily shrinking for decades. As a result, spending on everything else is being slashed, from police and poverty programs to public education.

This trend will intensify. By 2040 we are likely to spend 10% of GDP on interest payments alone (vs. 1.4% today). That's four times what we spend on education, infrastructure and scientific research.

The left must ask itself why it is tethered to a philosophy that insists that government's overwhelming responsibility is for pensions and health care even when, as an inevitable consequence, this starves other vital functions of the state.

Peterson is the wrong target for liberals. When Ronald Reagan was at the height of his popularity, Peterson ridiculed supply-side economics. "I want to strengthen the safety net for the poor. But to do so, we have to reform entitlements, because they are simply not sustainable in their current form," Peterson says. "The elderly population is doubling, and health care costs are rising rapidly."

That's the kind of innovation and reform the left should bring to the entitlement problem. Shooting the messenger doesn't help.

Read more: Zakaria



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