Now, there, too, Ryan’s plan is simply unrealistic. The theory behind it is that if individuals have to pay for their health care, they will shop carefully and drive down costs. It’s a good theory, but in health care, a huge part of the expenses relate to a small percentage of sick patients and to the last year of life – and those two categories overlap.Eighty-five percent of Medicare’s costs are generated by just 25 percent of patients. Now, even in the most conservative health alternatives, the health savings account, people get to buy catastrophic insurance. Well, the sick 25 percent of the patient population would have catastrophic insurance, which would still explode the Medicare budget.
So why do I applaud the Ryan plan? Because it is the first serious effort to begin talking about restructuring entitlements, which is a necessity. Democrats can attack the plan but they, too, must face up to the fiscal reality and come up with their own plans.The Government Accountability Office concludes that America faces a fiscal gap of $99.4 trillion over the next 75 years. Now that would mean we would have to increase taxes on average by 50 percent or reduce spending by 35 percent simply to stop accumulating more debt than we already have.
Medicare, Medicaid and social security will together make up 50 percent of the federal budget by 2021, in 10 years. For liberals, this long-term fiscal crisis should seem devastating. If entitlement programs continue to grow, they will soon crowd out almost all other government spending. This means there will be little money left for programs to address poverty, income inequality, education, infrastructure, science and technology, research and all the other purposes of active energetic government.