Medicare Won’t Go Broke!

This week we heard, again, that the Medicare trust fund will be insolvent in 2024, 5 years earlier than previous thought. That brought the usual response of scare tactics from Repugnuts. No more Medicare unless we totally overhaul the popular program. Of course, repugnuts believe only privatization of Medicare will work. Let’s calm down and take a deep breath and review how government trust funds work.

Federal trust funds are totally different from the private trust funds that most of us are familiar with. Federal trust funds are owned by the federal government and the feds can do whatever they want with any money deposited in them.

For example, the feds routinely “borrow” billions of dollars from the social security and Medicare trust funds. They write an IOU for these withdrawals, but that means little because they don’t have any intention in repaying these loans. Let’s face it, they’re just using F.I.C.A. and Medicare taxes as income taxes.

So, what happens when the Medicare trust fund balance reaches zero, or becomes negative? Absolutely nothing. Current tax receipts, proprietary receipts, and borrowing from the public (deficit spending) pay for current Medicare program outlays. Future benefit payments must be paid for with future collections and borrowing: the government does not squirrel away real economic assets to pay for future Medicare outlays.

By law the federal government must make good on its obligations to beneficiaries. The trust fund balances are irrelevant, both financially and legally.

Increasing healthcare costs will have to be funded either by increasing taxes, decreasing benefits, or increasing borrowing (deficit spending).

Don’t be swayed by the fear mongers in Congress. Let’s work hard to strengthen Medicare by not wasting money on unnecessary costs. This is the only way to ensure that Medicare will be around for our children and grandchildren.


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