“An Indictment of Government-Managed Health Care,” Schatz says

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today criticized national leaders for overseeing the fiscal deterioration of the Medicare program over the last four decades. The trustees who monitor the fiscal health of Medicare and Social Security concluded that the fund for hospital bills in the health insurance program will run dry by 2019, seven years sooner than predicted last year, largely thanks to the new Medicare bill.  Medicare begins dipping into its trust fund for the first time this year.

“Politicians in Washington ignored this problem for several decades, and then they make it worse by adding a costly prescription drug benefit,” CAGW President Tom Schatz said.  “The retirement of the baby boomers will spell fiscal doom for older and younger generations alike.”

Despite President Bush’s promise that any new Medicare legislation would strengthen the program's long-term financial security, Medicare's finances have "taken a major turn for the worse," according to the report.  The seven-year adjustment is the largest lurch toward projected insolvency in the program’s 39-year history.  Congressional efforts to reduce health- care costs are failing miserably, meaning higher premiums for Medicare patients in the near future.

“Congressional attempts at lowering health costs completely miss the mark,” Schatz continued. “They try to import foreign price controls and regulate eating habits when they should be reversing the government’s disastrous intrusion into the health care system.”

The report said changes to the law account for two years out of the seven-year acceleration toward fiscal insolvency.

The prescription drug benefit is not included in the estimate because it will be funded out of general revenue, not the hospital trust fund that is the main focus of the trustees' report.  Instead, the trust fund will be hurt by other parts of the law, such as subsidizing finances of doctors and hospitals in rural areas.  Over the next 75 years, Medicare will have an unfunded liability of $27.7 trillion, $8.1 trillion of that from the new drug benefit.

“Today’s politicians are raiding the paychecks of the unborn to impress senior citizens before the 2004 elections,” Schatz continued.  “In the last four months, the bill’s cost rose from $400 billion to $534 billion.  Imagine what the cost will be 10 years from now!”    

In 1965, Medicare was predicted to cost $26 billion in 2003; the actual cost is $245 billion.  Medicare’s unfunded liability currently hovers around $40 trillion.  A number of short-term problems are also plaguing the massive entitlement program.  The program that pays for doctor's visits unexpectedly ran a $10.3 billion deficit last year and is likely to have one of $1.7 billion this year, despite congressional efforts to prevent such shortfalls.  Taxpayers were recently subjected to a round of tax-financed TV ads promoting the new drug benefit.  The General Accounting Office is investigating whether the ads qualify as “covert propaganda.” 

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.