Inaction on Medicare Fiscal Problems Could Lead to Budget ‘Crisis’
USA Today on Monday examined how many budget experts from across the political spectrum say that inaction on Medicare's fiscal problems and other issues could cause the "worst fiscal crisis since at least 1983." The nation's "biggest" fiscal problem "by far" is that baby boomers in 2011 will begin enrolling in Medicare, USA Today reports.
If spending on Medicare grows 1% faster than the economy each year -- a "conservative" estimate -- the program in 2050 will cost as much as the entire current U.S. budget, according to USA Today.
U.S. Comptroller General David Walker said Medicare and Social Security benefits for baby boomers over the coming decades will overwhelm the federal budget. Walker added that the new Medicare prescription drug benefit worsens the situation.
Douglas Holtz-Eakin, director of the Congressional Budget Office, said he is "terrified" about how the aging population, health care inflation and advanced medical technology would affect the budget.
Stuart Butler of the Heritage Foundation predicted that spending on Medicare, Medicaid and Social Security will rise substantially through 2050, while tax revenue will remain stable. Butler said the government as a result will be forced to "renegotiate" such programs in order to avoid tax increases.
Budget experts said inaction on these and other fiscal problems could lead to higher interest rates, lower wages, shrinking pensions, slower economic growth, a lower standard of living, higher taxes, smaller savings, higher consumption, low stock and bond prices and recession, USA Today reports (Wolf, USA Today, 11/14).
Additional information about the Medicare drug benefit also is available online.