October 13, 2007

That's the forthcoming mantra from the usual suspects: Medicare For All, as a shorthand political pitch for a single-payer system of health care socialism, oops, wealth redistribution through the health care system.

They don't know how right they are. Federal spending on Medicare, excluding earmarked payroll taxes and premium payments, now consumes 12 percent of federal general-fund tax revenues. Without any changes in tax or entitlement policies, that will rise to 21 percent by 2020---only about 12 years from now---34 percent by 2030, and almost 50 percent by 2040. That last year is about 32 years from now; does 1975 seem all that far in the past?

Maybe we can tax our way out of this fiscal mess. If the payroll tax is not increased, other federal tax rates will have to rise by 25 percent. If the payroll tax is increased, a reasonable estimate is that it would have to double or more, while other federal tax rates would have to rise by 13 percent. What would the economic consequences of such tax increases be? Anyone? Anyone?

If, on the other hand, premiums are increased to cover the rising costs of Medicare---remember, we are talking only about budget costs, shunting aside all the other perversities attendant upon single-payer health insurance---premiums would consume over 30 percent of an average retiree's Social Security benefits in 2020, and over 50 percent by 2030.

And so the "Medicare For All!" slogan is ironic indeed, as all of us in the absence of reform will suffer the economic consequences of the Medicare entitlement monster. Reform? What's that? What much of the the Beltway political class wants instead is a large expansion in health-care entitlement "coverage" and spending, so as to increase dramatically the dependence of the middle class upon government. Who will pay for that? The question answers itself. And so those who argue that America, as the wealthiest nation on earth, is morally deficient because it lacks single-payer "universal coverage," ought to recognize that those two conditions are not independent.

Posted by Benjamin Zycher at October 13, 2007 10:39 AM

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