Medicare, Medicaid, and Social Security

For too long, politicians have been dishonest about the coming fiscal crisis created by irresponsible promises made by politicians. The solution, however, is not to turn our backs on the poor, disabled, and elderly. We can provide better benefits at a lower cost using market principles and more effectively targeting these programs to those most in need.


Medicare has unfunded liabilities of $38 trillion — the costs of promises that politicians have no idea how to pay.   The current program is bankrupt and broken.

The debate in Washington is often about “Medicare cuts.”  What most politicians are talking about are cuts to the arbitrary prices which bureaucrats in Washington set for individual health care services or procedures.  Doctors are regularly traveling to our nation’s capital to beg politicians not to cut their pay by as much as one-third.   The real problem is a top-down, price-fixing bureaucracy that puts the federal government squarely into your doctor’s office.

Politicians like Tim Murphy believe more government is the solution.  He argues for more federal intervention into your health care.  Despite claiming to be an expert on health care policy, Murphy lacks even a basic understanding of health care’s economics.  And rather than fixing Medicare, Murphy’s record has been to expand the program, including voting for Medicare Part D and its $18 trillion in unfunded liabilities.

In every other sector of our economy, competition and choice lead to more innovation, better quality and most importantly, lower costs.  Computers continue to be twice as fast and half as expensive, yet health care costs rise rapidly.  Real Medicare reform would provide higher quality health care to seniors at a lower personal cost.  It would also save taxpayers trillions of dollars.

There are many ways to reform Medicare around the principles of competition and choice, but my preferred reform would be to place all seniors into the same plans as their Members of Congress.   Their program offers over 200 competing health care plans available to federal employees.  With very little government control, these plans offer better coverage than Medicare at a lower cost to seniors.


The Medicaid program covers 64 million low-income and disabled Americans at a cost of $352 billion last year.  Yet across the nation, 40 percent of physicians do not accept Medicaid patients.  Medicaid recipients are forced to use the emergency room at twice the rate, and see specialists at half the rate of those with private insurance.   Medicaid patients are 50% more likely to die after coronary artery bypass surgery and are two to three times more likely to die from a cancer diagnosis.   Infant mortality rates are between 1.5 and 2 times the average for other patients.

The problem isn’t lack of resources.   Medicaid spending averages one quarter of each state’s budget and is the fastest growing federal entitlement program at growing by 8 percent each year.  Since 1970, Medicaid‘s per patient costs have risen 35 percent more than the combined costs of all private health care in America.

Fixing Medicaid requires eliminating federal strings and requirements that force states to misallocate capital based on the federal government’s priorities rather than the needs and desires of patients.  I support proposals to return money to states — block grants and similar legislative proposals — that would free states to innovate and allow them to experiment with many different reforms to bring costs down and improve quality.

Social Security

If the Social Security program is expected to provide income security for 157 million Americans and 54 million seniors currently receiving benefits, the system must be modernized and strengthened immediately.  Delaying sensible reforms gambles with the future of millions of retired and disabled Americans and could jeopardize the stability of those Americans who rely on the program.

Social Security posted a deficit in 2010 ($37 billion) and is permanently in the red.  The program has $6.5 trillion in unfunded liabilities over the next 75 years.   The program has already borrowed $2.6 trillion.  The Social Security Trustees recently warned that if the program is not reformed, current beneficiaries could see their benefits reduced by 23 percent.

There are common-sense reforms that should be adopted immediately: slowly raising the retirement age, cutting benefits for wealthy Americans who don’t need them, and prohibiting politicians from spending Social Security funds on other priorities.   Over the longer term, we need to give workers the ability to opt-out of the program and take more control over their own funds.