A few weeks ago I said:
Medical expenses now eat 16% of U.S. G.D.P. That percentage has doubled every thirty years; it was 8% thirty years ago, and 4% thirty years before that. It will probably double again, to 32%, in the next thirty years.
For many years policy makers have warned of an upcoming "Medicare Train Wreck," when rising medical costs collide with a surge of retiring baby boomers. Wednesday’s Wall Street Journal reminds us again:
A recently released report by the program’s trustees found that within seven years Medicare taxes will fall short of Medicare expenses by more than 45%. … Until a few years ago, Social Security and Medicare were taking in more than they spent, on the whole. Thus they provided revenue for other federal programs. That situation is now reversed, and last year the combined deficits in the two programs claimed 5.3% of federal income tax revenues. In 15 years these two programs will require more than a fourth of income tax revenues: … By 2030, … these two programs will require almost one out of every two federal income tax dollars.
If the world stays relatively boring, this will be the biggest US politics issue over the next twenty years. The key questions:
- Who will pay: raise taxes, limit treatments covered, tax docs, or cut off the richer & younger?
- Who will be blamed: docs, the old, the young, the rich, the poor, Republicans, Democrats, corporations, immigrants, foreigners?
Added: Income tax is only half of federal taxes, but most of Medicaid, which is about as big as Medicare, also goes to the elderly.