Medicare and the United States

Alright, US, time to bite the bullet.

Current estimates place the Medicare debt as of 2050 at ninety trillion dollars. That's a quarter billion dollars for every day between now and 2050. It makes the scale of the financial crisis look trivial. This is not something you can let sit.

Now, part of this problem stems from the fact that you've gone and divided your public health care system into two parts: Medicare for the old, and Medicaid for the poor. I'm the first to admit that our (Canada's) healthcare system has its flaws, but at least we're not that stupid. More organizations means more bureaucracy, which means more money gets eaten up in things that provide no benefit to those covered by the plan. It also means more confusion, and, likely, legal fees.

Now, your first problem is glaringly obvious, even to me. Medicare in the United States is supported by a 2.9% income tax, across the board. Now, this one's probably going to hurt, but there's one important step that can be taken immediately - crank up income taxes. On average, 30% of the nation's income is taken in by government of one level or another. I'm willing to bet that, as a nation, you can bring that up to 50% without ever raising taxes on the low-income bracket. An adjustment to your taxes to make them more progressive would do the trick; here in Canada, the highest earners pay around 55% on their income. This is fair because they're still far better off with their 45% than the next bracket is with 50%, and so on down. Under Canadian tax law, you will never earn less by jumping a tax bracket.

It's a bitter pill to swallow, but given the announced one trillion dollar deficit your government is running, I don't think sweetness is in your future. (I'm trying to keep this condescending, but I'm going to have to segue to astonished for a moment - the bailout notwithstanding, how in the name of everything that is good in the universe did you manage a deficit that tacks another 10% onto the largest national debt in the world? That's 2.5% of the stock market valuation - for the entire world. Your deficit.)

I mean, 19% of your federal budget already goes to paying interest on the debt, and I can't imagine that anyone still willing to lend is going to do so at anything but punitive interest rates. So we're rapidly approaching the point where out of every dollar spent by the government, a shiny new quarter goes to paying for the costs of the debt. Not reducing it - just paying for its very existence.

But I digress. Back to Medicare. My proposal was to hike taxes. That's stage one. Then (and I know this word will hurt) socialize healthcare altogether. Medicaid was never a good implementation - too little, too poorly managed. Lay down firm federal guidelines for how the states are to run their healthcare systems, and then take medicine out of the hands of private business. The free market is not the place to go - the free market is what brought you the Financial Crisis, the Housing Crisis, and a host of other Crises that haven't yet burst on the scene. More to the point, you don't want your healthcare providers playing "survival of the fittest". You want them to provide healthcare. Additionally, by socializing healthcare, you take health insurance costs off your populace's shoulders - and thereby add to their take-home income, which you can then tax more heavily with fewer complaints. Pay doctors something that will allow them to get out of med-school debt, but not the ludicrous amounts doctors can charge in your economy. If they want to make that kind of money, they can go to a country that's willing to work itself into the mess you're in now.

If you want, you can make it two-tier, with a free-market healthcare system running wounded. That might take some of the stress off the socialized portion - but in my experience, the socialized system runs pretty well.

Whatever you decide to do, though, oh neighbour to the south, you'd best do it soon - because ninety trillion dollars is a hell of a lot of money. You've got forty years. Better make the most of 'em.