The birthday was last week of course, July 30, and the champion is none other than Representative Anthony Weiner, so just because I can, here is the video again, in which he challenges Republicans to get rid of Medicare.

I just wish he'd said I double-dog dare you.

Now, about that money in the bank....

If you lost your job tomorrow and had to live entirely on your savings, how long could you survive at your current rate of spending? A week? 4 months? 10 months? A year and and a half? 4 and and a half years?

For comparison, last year, Social Security paid out $509 billion and ended the year with $2.2 trillion [with a T] in assets [money in the bank, for this post]. If everybody stopped paying into Social Security tomorrow, there's enough money in the bank to pay all the current recipients the same amount of money as they got last year, for more the next 4 years and some months, just short of 4.5 years. Yeah, yeah, lots of assumptions [nobody dies, or retires, on goes on disability in the next 4 years...] but this post is just about big-picture stuff, no nitty gritty details tonight [well, not too nitty gritty].

Medicare Part A, the part that pays for hospitalization, could go on for 16 months if all income stopped tomorrow.

Medicare Part B, the part that pays for doctor visits basically, could go on for nearly 4 months.

Medicare Part D, the part that pays for prescriptions, would last about a week.

If you add up all the money Medicare has in the bank, and all the money Medicare paid out last year, Medicare has enough money in the bank to carry on as if nothing happened for nearly 10 months if all the money stopped coming in tomorrow.

So why the panic?

NB: I took the charts below directly from an AEI presentation, but they're basically from the 2005 Medicare Trustees Report [spending in 2004].

Every year, the Medicare trustees sit down and gaze into their crystal ball calculate three spending scenarios, labeled appropriately enough, low cost, intermediate cost, and high cost [if you want details, you can dig into the reports]. They guess at project what each trust fund [there's one for Medicare Part A and one for Medicare Part B] will have in it every year for the upcoming 10 years, how much will be spent on medical costs, and how much will be collected in taxes, interest income, etc.

Back in 2004, they predicted that in 2008, using the intermediate cost guess projection, the Part A trust fund would have $316 billion in the bank, and that this would be 139% of what would be spent in 2008 on Part A stuff. They weren't far off: the trust fund assets = $321 billion and this is 136% of what was spent. How does this compare to the entire history of Medicare?

As you can see from the chart above, this puts us squarely on the intermediate cost path, and we couldn't go on like this forever, but the trust fund is clearly in way better shape than for most of Medicare's entire history. You'll note that the assets-to-spending ratio dropped precipitously to a nail-biting 20% in 1983. That would be back during the Reagan days, for those of you who weren't paying attention.

Here's the same data, presented a little differently, again for Part A. Instead of showing the assets-to-spending ratio, it gives the income, outgo, and total $ in the trust fund. Back in 2004, the trustees thought we'd have $315.6 billion in the bank [we have $321.3 billion], we'd have $230.6 billion in income [it was $230.8 billion], and that we'd spend $219.4 billion [oops, we spent $235.6 billion].

If you're interested in checking up on how well they predicted, back in 2004, what Part B [and this includes Part D too, I think] would look like in 2008, you can check this chart against the report.

Meanwhile, what is all this entitlement spending doing to the money we could be spending on wars other things? If you looked at the chart below, of historical and projected Social Security and Medicare spending combined, you would think ZOMG! Look at how much we're going to be spending on the old people! Quick! Get them to the ice floes now now now!

Of course, what you see, looking back over the past, is that spending rose fairly rapidly from about 2.5% of GDP in 1965 to about 7% of GDP in the early 1980s, and then leveled off, fluctuating slightly around 7% ever since then. What was 2008 like? We spent $509 billion on Social Security and $468 billion on Medicare, for a total of $977 billion, which is... 6.8% of the $14.3 trillion, somewhat shrunken, GDP in 2008. Hard to tell, looking at a small chart on a pixelated screen, but looks to me like that puts us on the low-cost path so far.

It would be nice, of course, if we could say the same about Medicare as we can about Social Security, that it would go on undisturbed for four more years in case of utter catastrophe, but we can't. Yet. Still, there's no reason for the massive panic that the fiscal scolds are always trying to stir up. Especially since we could fix the problem in short order by putting all 307,212,123 of us into Medicare and raising the payroll tax [and a coupla other taxes].