Center for Business and Economic Research - Ball State University


CBER Data Center
Projects and PublicationsEconomic IndicatorsWeekly CommentaryCommunity Asset InventoryManufacturing Scorecard

About

Commentaries are published weekly and distributed through the Indianapolis Business Journal and many other print and online publications. Disclaimer

RSS Feed

Disclaimer

The views expressed in these commentaries do not reflect those of Ball State University or the Center for Business and Economic Research.

Recent

Two Key Economic Lessons in One BillHoosiers face trade-offs and opportunity costs in the wake of SEA1.

Time to Fix Economic Development PolicyAllocating tax dollars to land development won’t cause economic growth.

The Unanticipated Effects of SB1Businesses, governments and households may all feel the effects.

The Stupidest of PoliciesThis whipsawing of tariff rates has unnerved financial markets, which on Wednesday, were toying with a liquidity crisis.

View archives

Top Tags

jobs and employment 261
economics 201
state and local government 188
education 186
indiana 171
economic development 171
budget and spending 145
taxes 144
law and public policy 142
workforce and human capital 139
Browse all tags
Reporter / Admin Login

June 26, 2006

Affordable Universal Health Care is Not Affordable

As an economic forecaster, I am almost always optimistic.  But that’s not a personality trait.  It’s the nature of the business.  The economy around us is doing amazingly well.  We’ve had much longer economic expansions, steady job and income growth, and less frequent recessions for more than two decades now.  So when you deliver an optimistic forecast these days, you stand a pretty good chance of being right.

But if there’s one area where my optimism vanishes, it is this – how we will wean ourselves away from the runaway costs of publicly funded entitlement programs, especially health care.  What troubles me is not the size of the challenge, or even the fact that we’ve ignored it for so many years.  It is that so many solutions proposed for the problem will only make it worse.

At least when it comes to financing Social Security, we’re beginning to see the light.  Most of us understand that it is the working generations that pay the bills for those collecting benefits, and that lower birth rates and longer-living retirees are creating an imbalance.  Most ideas that address that imbalance – other than simple denial – are unpopular, unsurprisingly, but at least they are out there and are being discussed.

The debate in health care financing, where the crisis is much more acute, is in much sorrier shape.  Not only is the discussion taking us in the wrong direction, but, if anything, it’s picking up steam.

For example, consider this fact.  For many people, if not most of us, the single, largest problem with health care in this country is the fact that millions of Americans – and hundreds of thousands of Hoosiers – do not have health insurance.  In the wake of the Massachusetts law that purports to solve this problem by mandating individuals to carry insurance, there has been a resurgence of enthusiasm for universal, single-payer health care.

Such a system already exists in this country.  It’s called Medicare.  And if you think this has solved the issue of health care for those aged 65 and over, then consider this.  By year 2020, according to official projections, that program will be insolvent.  In that year, Medicare taxes will only cover 79 percent of program expenses, with the remainder made up from the so-called Medicare trust fund.

But that trust fund is invested in Federal securities, which have in turn, financed other government spending.  Drawing down this trust fund means either retiring debt – something that has rarely been done by the Federal government – or issuing new debt.  To state it another way, Medicare becomes a burden on the rest of the Federal government’s finances the day that its tax revenues no longer cover its expenditures. 

And that day has already happened.  According to the trustees report, Medicare program expenditures crossed the revenue threshold last year.  Other entitlement programs are not far behind.  By year 2017, Social Security revenues will fall short of expenditures as well.  In fact, by that same year the spending on just five areas – Social Security, Medicare, Medicaid, defense, and interest on the national debt – will exhaust every dollar of revenue that the Federal government has.  Indeed, by year 2030, just the first three items on that list will break the bank.

As a sustainable mechanism for financing the delivery of health care to seniors, Medicare as it stands today can only be called a colossal failure.  Yet we find ourselves urged to expand its single-payer concept to more sub-populations and more health care services. 

In fact, the more expensive health care becomes, the more urgent these calls for expanded coverage under the tent of universal care become.  Which, in turn, makes the collapse of the entire tent even more imminent.  And I find that very depressing.

Link to this commentary: https://commentaries.cberdata.org/212/affordable-universal-health-care-is-not-affordable

Tags: health care, economics, finance


About the Author

Pat Barkey none@example.com

Patrick Barkey is director of the University of Montana Bureau of Business and Economic Research. He served previously as Director of the Bureau of Business Research (now the Center for Business and Economic Research) at Ball State University, overseeing and participating in a wide variety of projects in labor market research and state and regional economic policy issues. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

© Center for Business and Economic Research, Ball State University

About Ball State CBER Data Center

Ball State CBER Data Center is one-stop shop for economic data including demographics, education, health, and social capital. Our easy-to-use, visual web tools offer data collection and analysis for grant writers, economic developers, policy makers, and the general public.

Ball State CBER Data Center (cberdata.org) is a product of the Center for Business and Economic Research at Ball State University. CBER's mission is to conduct relevant and timely public policy research on a wide range of economic issues affecting the state and nation. Learn more.

Terms of Service

Center for Business and Economic Research

Ball State University • Whitinger Business Building, room 149
2000 W. University Ave.
Muncie, IN 47306-0360
Phone:
765-285-5926
Email:
cber@bsu.edu
Website:
www.bsu.edu/cber
Facebook:
www.facebook.com/BallStateCBER
Twitter:
www.twitter.com/BallStateCBER
Close