Bipartisan Deal to Slash Medicare and Medicaid

Stephen Lendman

It's been planned for years. Republicans want them eliminated. Democrats agreed to incremental cuts to make ending core social contract programs look normal. Slashing Social Security comes later.

On November 24, New York Times writer Robert Pear headlined, "Support Builds for a Plan to Rein in Medicare Costs," saying:

Congressional Supercommittee members "built a case for major structural changes in Medicare (and Medicaid) that would limit the government's open-ended financial commitment...."

Privatization is recommended. Republicans and some Democrats agree. Expect more to come on board. Methodology might be to provide beneficiaries fixed sums for private plans. They'll cost more and deliver less.

Proponents call the idea "premium support." At issue is shifting government's responsibility to beneficiaries. Washington would pay premiums in increasingly smaller amounts until they bear full responsibility.

Doing so will leave seniors entirely on their own for healthcare when they most need it. Unaffordability won't matter. Understating the problem, John Rother, National Coalition on Health Care president said:

"The Supercommittee may have laid the groundwork for future reductions in the growth of Medicare."

In fact, "the gang of 12" secretly agreed to major cuts on the way to eliminating government's responsibility for healthcare entirely. After that, attack Social Security.

Last year, Obama's National Commission on Fiscal Responsibility and Reform (NCFRF) recommended deep Medicare cuts, higher Medicaid co-pays, and restrictions on filing malpractice suits, among other ways to end Washington's responsibility for healthcare incrementally.

The Bipartisan Policy Center (BPC) also recommended deep Medicare cuts, higher Part B premiums, big co-pays and outpatient fee increases, and establishing privately owned, lower-cost health insurance exchanges to gradually eliminate traditional Medicare. It also wants Medicaid funding cut.

Congressional Democrats and Republicans agree on raising Medicare's eligibility's age. So does Obama. He also supports deep cuts. Expect his new Independent Payment Advisory Board to recommend them. The Congressional Budget Office (CBO) said current proposals will force seniors to pay more for coverage, much more.

In 2012, bipartisan agreement on Medicare and Medicaid cuts are coming. Backloading will delay pain until after the November 2012 elections. Last June, Vice President Biden agreed to $500 billion in Medicare/Medicaid more cuts on top of previously imposed big ones. Republicans want $780 billion. Splitting the difference is likely. More reductions will come later. Both sides agree.

By mid-decade, traditional Medicare will provide half of today's benefits. Seniors will need private plans for full coverage. Those unable to afford them will be out of luck.

Proponents falsely say Medicare, Medicaid and Social Security are responsible for rising deficits and America's national debt burden. They also bogusly claim Medicare and Social Security are going broke. When properly administered, in fact, both programs are sustainable long-term with modest adjustments and by curtailing escalating healthcare costs.

Wall Street bailouts, other corporate handouts, excess military spending (including huge black budgets), and tax cuts for the rich caused today's unsustainable debt problem. Price gouging by health insurance providers, drug companies and large hospital chains exacerbates it

Over the past decade, Social Security-run surpluses went for debt reduction to make it appear the fund's not sustainable. In fact, since 1986, it produced $2.4 trillion more than it spent.

Much of the surplus came from increasing the payroll tax and indexing to inflation. Its share of total federal tax revenues rose from less than 30% to 44%. At the same time, corporate income tax amounts fell from around 20% to under 10%.

In other words, for a generation, Social Security revenues subsidized corporate handouts, tax cuts for the rich, and America's wars. Its surplus could be sustainable well into the future if government policies stopped draining it irresponsibly.

Moreover, if the full payroll tax is restored and annual $108,600 income cap lifted to make America's wealthy pay the same percentage cost as others, potential Social Security shortfalls could be eliminated for generations. If draining the trust fund also stopped, surpluses could be generated in perpetuity.

In addition, if capital gains were taxed like income, huge amounts would be raised for traditional Medicare, prescription drugs under Part D, Medicaid, and other social programs on the chopping block for big cuts or elimination.

Medicare would be just as sustainable with real healthcare reform under a universal single-payer system. By eliminating private insurer middlemen, costs would be drastically cut.

In its September 2007 report to Congress, the Congressional Research Service (CRS) compared 2004 US healthcare spending with other OECD (Organization for Economic Cooperation and Development) countries.

It found America spent $6,102 per person, well over double the $2,560 average for other OECD countries. Much of the difference comes from insurer administrative costs providing no care. Other OECD countries deliver better services overall at less than half what Americans spend.

Draining Social Security's trust fund and perpetuating outlandishly high healthcare costs makes it appear that entitlements seniors rely on are going broke.

In other words, crisis conditions were artificially created. Congressional cassandras claim Social Security and Medicare are unsustainable. Bipartisan chicanery wants big cuts in both programs before privatizing them on route to eliminating them altogether.

Political Washington hypes the problem. So do media scoundrels, Obama's Simpson/Bowles deficit cutting commission, and the Bipartisan Policy Center (BPC). Their solution is slash, then end America's social contract to transfer maximum wealth to corporate favorites and the nation's super-rich.

A Final Comment

When responsibly run, Social Security and Medicare are sustainable long-term with plenty left over for Medicaid and other vital programs for America's needy. Moreover, if corporations and rich elites paid their fair share, the possibilities are limitless.

If the business of America became peace, less militarism, no wars, making friends, not enemies, retaining high-paying/good benefit jobs at home, letting unions bargain collectively with management on equal terms, making universal free education and single-payer healthcare priorities, ending destructive trade deals, and guaranteeing living wage security, imagine how different things could be.

In addition, if money power returned to public hands and direct democracy serving everyone responsibly replaced duopoly power, near utopian conditions might be realized.

Anything is possible when committed people work long-term for them. If that's not incentive enough, what is?

Stephen Lendman: I was born in 1934 in Boston, MA. Raised in a modest middle class family, attended public schools, received a BA from Harvard University in 1956 and an MBA from the Wharton School at the University of PA in 1960 following 2 years of obligatory military service in the US Army. Spent the next 6 years as a marketing research analyst for several large US corporations before becoming part of a new small family business in 1967, remaining there until retiring at the end of 1999. Have since devoted my time and efforts to the progressive causes and organizations I support, all involved in working for a more humane and just world for all people everywhere, but especially for the most needy, disadvantaged and oppressed. My efforts since summer 2005 have included writing on a broad range of vital topics ranging from war and peace; social, economic and political equity for all; and justice for all the oppressed peoples of the world like the long-suffering people of Haiti and the Palestinians. Also co-hosting The Global Research News Hour, occasional public talks, and frequent appearances on radio and at times television. I also am a Research Associate of the Centre for Research on Globalization. I live in Chicago and can be reached at Also visit my blog site and listen to The Lendman News Hour on Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening. My new book "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War" can be ordered HERE.



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