Government | Michael R Lewis, ASJA

September 20, 2013January 3, 2024

The National Debt Ceiling Deja Vu

The circus is coming back to town, seemingly an annual occurrence following the 2010 Congressional elections. Republicans gained control of the House of Representatives with the most House seats since 1938 (242 Republicans, 193 Democrats), while Democrats retained control of the Senate with 53 seats. And even though Democratic President Barack Obama won reelection in 2012, Congress remains divided between the Republican-controlled House and the Democratic-controlled Senate.

It’s not just a divided Congress that contributes to the annual political circus. The 2010 elections also introduced an ultra-conservative movement into the Republican Party – a unique coalition of politicians combining anti-tax, reduced government spending, libertarian, social conservative, and anti-immigration groups centered in rural areas and the Deep South. Aided by years of gerrymandering by both political parties to create safe seats, 87 freshman House Republicans came to Washington committed to the tea party movement, reflecting the group’s influence on Congressional elections and party primaries, pushing the Republicans to the right and further embracing a “no compromise” stance.

Medicaid – How It Works

Many health officials believe that Medicaid is the glue that helps to hold our healthcare system together, taking on the highest-risk, sickest, and most expensive populations that cannot qualify for outside private insurance or Medicare. It is America’s ultimate safety net. Unfortunately, it is also extremely costly: Medicaid, Social Security, and Medicare – the “big three” entitlement programs – accounted for 44% of the federal budget in 2012, according to The Heritage Foundation, and collectively consumed more than $2 trillion of services, with total revenues of $2.4 trillion.

According to the Congressional Budget Office, the Federal Government spent $275 billion in 2011 for Medicaid, covering on an average month 54 million Americans. Medicaid expenditures including federal funds is the largest government expenditure in each of the 50 states. Considering only state funds, Medicaid expenses trail only primary and secondary education expenses in state budgets.

Without fundamental change, our social welfare programs (including Medicaid) will ultimately bankrupt the country or drive taxes to unsustainable levels. A distinct possibility is that millions of poor Americans – the elderly, disabled, and children – will face a future without adequate healthcare or long-term nursing care.

The Future of Medicare – Two Approaches

The costs of healthcare in the United States is a potent issue in the forthcoming election. Both political parties agree that immediate steps must be taken to reduce the proportion of the nation’s gross domestic product (GDP) dedicated to healthcare, but approach the problem from vastly different perspectives and, as a consequence, propose equally diverse solutions. In particular, prospective changes in Medicare – the public health insurance program for people age 65 and older – has become a battleground as both parties seek to capture the senior vote.

The financial cost of Medicare alone, distinct from the larger category of general healthcare, is exceeded only by the expenses of Social Security and military spending. Medicare costs were 3.7% of gross domestic product (GDP) in 2011, and are projected to grow to 6.2% of GDP by 2085. As President Barack Obama stated in a message to Congress on September 8, 2011, “Millions of Americans rely on Medicare in their retirement. And millions more will do so in the future. But with an aging population and rising healthcare costs, we are spending too fast to sustain the program. And if we don’t gradually reform the system while protecting current seniors, it won’t be there when future retirees need it.”