Ridiculous my butt. If you think that Obamacare is really going to reduce Medicare costs, you are smoking something. Medicare Part A has been running in the red since 2008. The shortfall is being made up using the IOUs in the HI Trust fund. These IOUs are being redeemed by the General Fund. Since we borrow 42 cents of every federal dollar spent is borrowed, we are adding to the national debt.
By law, 75% of the costs of Medicare Parts B and D are funded by the General Fund. The premiums only pay for 25% of the costs. In the 2012 Trustees Report $222 billion came from the General Fund in 2011 for SMI (Medicare Parts B and D) and $87.8 billion for Medicare Part A. These costs will continue to increase as the population ages and healthcare costs increase faster than inflation. People who look at the actuarial soundness of Medicare assume that the USG will continue to fund 75% of SMI from the General Fund. Medicare is consuming about 15% of the non-Medicare portion of the federal budget and if not reformed will consume the entire federal budget.
Obamacare may be the law, but it has not been fully implemented with all of the projected tax revenue. From the Trustees:
Also, as described in the Medicare Trustees Report, the projections for HI and SMI Part B depend significantly on the long-range feasibility of the various cost-saving measures in the Affordable Care Act�in particular, the lower increases in Medicare payment rates to most categories of health care providers. For such efforts to be successful in the long range, providers will have to generate and sustain unprecedented levels of productivity gains or other improvements in efficiency."
"Concern about the long-range financial outlook for Medicare and Social Security often focuses on the exhaustion dates for the HI and OASDI trust funds—the time when projected trust fund balances under current law would be insufficient to pay the full amounts of scheduled benefits. A more immediate issue is the growing burden that the programs will place on the Federal budget well before exhaustion of the trust funds.
Chart D shows the excess of scheduled outgo over dedicated tax and premium income for the OASDI, HI, and SMI trust funds expressed as percentages of GDP. Each of these trust funds’ operations will exert rapidly rising pressure on the Federal budget in future years. General revenues pay for roughly 75 percent of all SMI costs. From now through 2024, interest earnings and asset redemptions, financed from general revenues, will cover the shortfall of HI tax and premium revenues relative to expenditures. In addition, general revenues must cover similar payments as a result of growing OASDI deficits through 2033.
In 2012, the projected difference between Social Security’s dedicated tax income and expenditures is $165 billion. For HI, the projected difference between dedicated tax and premium income and expenditures is $38 billion. The projected general revenue demands of SMI are $217 billion. Thus, the total general funds for Social Security and Medicare in 2012 are $420 billion, or 2.7 percent of GDP. Redemption of trust fund bonds, interest paid on those bonds, and transfers from the general funds provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.
Chart D shows that the difference between cost and revenue from dedicated payroll taxes, income taxation of benefits, and premiums will grow rapidly through the 2030s as the baby-boom generation reaches retirement age. This imbalance would result in vastly increased pressure on the Federal budget if the law were changed to maintain scheduled benefits in the absence of an increase in dedicated tax revenues, with such financing requirements equaling 4.8 percent of GDP by 2040.
The bottom line is that the $60 trillion is probably understated in terms of the total federal budget. And the imputed impact of Obamacare on reduced payments to hospitals and doctors may well be ephemeral in much the same way as the "Doc fix" that must be implemented every year to waive the reduction in physician payments under Medicare.
Medicare beneficiaries receive three times more in benefits than they pay into the system. How can you sustain such a system?
This graph shows that the average man and woman (average defined in the study as average income over their working lives and living to the average life expectancy) who start receiving benefits in 2010 get over 3 times more in benefits than they pay in to the system! Of importance, the study accounts for inflation by calculating all past taxes and future payments in 2010 dollars to provide an accurate comparison.
If the notion that Medicare recipients are simply "getting back what they paid in" is false then where is the money coming from? Simply, the excess received is being borrowed from younger generations and the cost is more than we can bear.