Subheading of the book being ‘How Washington Is Betraying America’s Young’ and Part I is on “Unfunded Promises” and “Paying for Parents’ Health Care”.
At the state level, runaway pension plans for public-sector employees pose a serious threat to state budgets. As well-connected public-sector unions fight against any changes to generous pensions, it is the poorly represented taxpayers, the young people just starting their careers or those who cannot yet vote, who will end up footing the bill. (page 13)
“The American body politic has acquired deficit-attention-disorder.” Christopher Demuth (page 17)
By the end o f2013, total [Social Security] beneficiaries amounted to 58 million….[and] cost $808 billion……[Medicare] enrolled 52 million and cost $583 billion. (pages 20-21)
The Medicare Modernization Act of 2003 requires that the Boards of Trustees determine each year whether the annual deficit exceeds 45 percent of total Medicare costs in any of the first seven fiscal years of the 75-year projection period. If it does exceed 45 percent, then they must include a report on “excess general-revenue Medicare funding.” If two of these reports are required consecutively, then there is a “Medicare funding warning” that forces the president to respond to the overrun by proposing legislation within 15 days of the next budget submission. Congress is then required to consider the proposal with priority. So far, Washington has not responded to the funding warnings that have been a part of seven of the last eight reports. Politicians are breaking their own law. Again, Washington does nothing and then wonders why our fiscal position is deteriorating. Washington did pass a law constraining Medicare’s growth. reimbursements to Medicare physicians are supposed to be trimmed whenever Medicare exceeds a pre-set growth rate. But Washington repeatedly repeals the proposed cuts to Medicare physicians. If it failed to do so, no doctor would participate in Medicare. (pages 21-22)
States hold an additional $5 trillion in liability, of which $4.4 trillion represents debt for pensions and other post-employment benefits. This does not even include the pension or capital-market debt of cities, counties, and other local government entities. (pages 22-23)
Using a discount rate that represents actual returns makes plans’ fiscal conditions look worse, but showing an accurate picture of funding levels is something that benefits all stakeholders – public-sector workers, retirees, elected officials, and taxpayers. How can policymakers achieve their goals if they do not have a clear picture of what is going on? In other words, lying with numbers does no favors for anyone. (page 25)
Since insurance companies are not allowed to charge older people more than three times as much as younger people (a provision known as “modified community rate”), the law artificially holds down the premiums of older people and raises the price for the young. (page 31)