Mitch Daniels Fear Mongers About Medicare’s ‘Implosion’ In State Of The Union Response

Gov. Mitch Daniels’ (R-IN) Republican response to the State of the Union address faulted President Obama for failing to admit the “grave” state of the nation and urged lawmakers to “trust Americans enough to tell them the plain truth about the fix we are in, and to lay before them a specific, credible program of change big enough to meet the emergency we are facing.” Daniels highlighted the sorry state of America’s safety-net programs — Medicare and Social Security — and warned that unless “we…save” these initiatives, “these proud programs” will “implode”:

“There is a second item on our national must-do list: we must unite to save the safety net. Medicare and Social Security have served us well, and that must continue. But after half and three quarters of a century respectively, it’s not surprising that they need some repairs. We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too. […]

“The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing Listening to them much longer will mean that these proud programs implode, and take the American economy with them. It will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in their later years.

Watch the speech:

The comments were meant to lay the groundwork for the GOP’s renewed push for Medicare privatization, a rebranded effort — hinted at last week by House Speaker John Boehner (R-OH) — to cloak Rep. Paul Ryan’s (R-WI) “premium support” plans in bipartisan colors and tout more moderate initiatives that would add more legitimacy to the GOP approach. In reality, Daniels’ rhetoric about Medicare’s impending demise is greatly exaggerated.


As Maggie Mahar has points out, according to the program’s trustees, by 2024 Medicare’s Hospital Insurance (HI) won’t be exhausted, but rather “insolvent” — which simply means that dedicated revenues will not be sufficient to pay all of its bills. The hospital fund will meet 90 percent of its commitments and in the succeeding years that shortfall will slowly widen and then contract, so that in 2085, Medicare could pay out 88 percent of its obligations.

That’s hardly an implosion, but it also doesn’t mean that we can allow the program to grow at its current rate. Fortunately, the Affordable Care Act will reduce Medicare spending by $86.4 billion from previous projections and lower the average annual Medicare spending growth by 1.4 percentage points between 2012 and 2019. “By 2019, it is projected to grow 7.7 percent — 0.9 percentage point more slowly than we projected in February 2010,” a Center for Medicare and Medicaid Services (CMS) report has concluded.

In fact, far from misleading Americans that “we should change nothing,” Obama has proposed to accelerating those savings by expanding the authority of the Independent Payment Advisory Board (IPAB) — a 15-member commission that would make recommendations for lowering Medicare spending to Congress if costs increase beyond a certain point — and finding more savings in the Medicare program.

Republicans, however, reject these measures or other reforms that would actually slow Medicare’s growth rate. After all, the success of any of these changes would undermine the political argument for privatization.