November 12, 2016

Heady with Republican control of the White House, the Senate, and the House, Paul Ryan is running at full speed for the third rail that consists of Medicare and Social Security.

In an interview with Fox, Ryan has stated that Medicare is going broke. As Jonathan Chait of New York magazine notes, though, Medicare is not going broke.

Ryan tells Baier, “Because of Obamacare, Medicare is going broke.” This is false. In fact, it’s the complete opposite of the truth. The Medicare trust fund has been extended 11 years as a result of the passage of Obamacare, whose cost reforms have helped bring health care inflation to historic lows. It is also untrue that repealing Obamacare requires changing traditional Medicare. But Ryan clearly believes he needs to make this claim in order to sell his plan, or probably even to convince fellow Republicans to support it.

Privatizing Medicare was not a Trump Promise

Privatizing Medicare is not something Trump promised. If he had, he wouldn't have picked up a state like Florida. However, his new transition web site takes a break from advertising Trump businesses and properties (since pulled) to list Modernize Medicare, so that it will be ready for the challenges with the coming retirement of the Baby Boom generation – and beyond.

Hard to say what that means, other than it sounds like Trump doesn't seem to realize he's no longer running a campaign and has to actually come up with solid proposals.

We're Doomed!

Bottom line: should we panic? Is Medicare doomed?

In my opinion, no. For one, Medicare is an extremely popular program. The only program more popular is Social Security. They're both known as third rail programs because touching either is immediate death for the political leader and his or her party.

For another, we're not hearing from Mitch McConnell. Paul Ryan has to appease a rabid bunch of anti-governmental types in the House, and one way to do so is mumble about gutting Medicare. The Senate isn't as volatile, and McConnell knows the consequences of screwing around with Medicare.

But...Affordable Care Act

Medicare is bound up with the Affordable Care Act, and that's where things get complicated. Because of changes in the Affordable Care Act, full funding for the Medicare Hospital Trust Fund is guaranteed through 2028, and partial funding for considerably longer (at least through 2090). If the Republicans follow through on their threat to completely repeal the Affordable Care Act, then they will be undermining funding for the Medicare Hospital Trust Fund.

What's even more interesting is the ACA helped extend the Medicare Hospital Trust Fund by implementing cuts in hospital costs. This allows existing funds to last at least 11 years longer. If the ACA is repealed, these cost-cutting measures would be removed.

So, the Republicans are reversing an effort by the government to reign in out-of-control hospital costs. Peachy.

Bottom Line: Medicare is Not Going Bankrupt

Even the extreme move of repealing the Affordable Care Act without consideration of the Medicare provisions doesn't mean that Medicare is going bankrupt. And that portion of Medicare that pays for doctors, outpatient costs, and medicine can never run out of money.

Using the havoc the destruction of the ACA would trigger as an excuse to throw seniors off this extremely popular government program may tickle Ryan's fancy, but all it will do is usher in a Democratic take over the next election. This isn't going to happen.

What is more likely to happen is that Republicans will use the ACA repeal as an excuse to begin manipulating Medicare in an effort to begin a push to privatize the program. This is what we have to be wary of, because the change could be packaged in an obscure or innocent sounding provision that flies under the radar. Once that door is opened...well, it won't be good.

In an even more duplicitous move, the Republicans can separate out the Medicare provision from the ACA, package it separately, and then Trump can sign a bill that "saves Medicare". And won't that look good in his re-election campaign.

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