In an incredible admission of failure, the Obama administration has abandoned the long term care insurance program that was part of Obama Care. The reason: The health reform act had a provision that required the Secretary of Health and Human Services to certify that the program would be solvent for 75 years before the program could be launched.
But as the Secretary was forced to admit, the program was anything but solvent. Premiums collected during people’s working years were not going to be saved and invested, the way a private insurer would do. Instead, all funds collected were going to be spent immediately on other Obama Care benefits. In short, the long term care insurance program was designed exactly like a Bernie Madoff Ponzi scheme.
But wait a minute. What if we applied the same 75 year test to Social Security? Or Medicare? Or the disability program? Could any of these programs pass muster? Not on your life. As the Social Security trustees remind us every year in their annual report, these programs have unfunded liabilities totaling tens of trillions of dollars.
According to the trustees’ latest accounting, to make it for 75 years Social Security needs an additional $6.5 trillion in the bank right now, earning interest. That is, we’re coming up short by an amount equal to about 43 percent of our annual national income. Medicare is in worse shape. It’s falling short by $22.1 trillion.
That’s why we have an entitlement program funding crisis. As The Washington Post pointed out the other day, Social Security is paying out more than it’s taking in; and the cash flow deficit will only get worse in future years.
That news story provoked outrage on the left, however. Liberal economist Dean Baker claimed that Social Security has a trust fund that can pay benefits for years. Paul Krugman, at The New York Times, insisted that there are trillions of dollars in the trust fund. You know we are in silly season when otherwise reputable economists make statements as ludicrous as these.