And they know that their will be relatively fewer workers paying earmarked taxes into Medicare. So insolvency may be 15 years away, or maybe 25 years away, but it's coming, and coming in a big way. Proposals like Senator Breaux's, on the other hand, try to make Medicare function more efficiently so that the financing gap is smaller. The health care industry is in the midst of a major transformation, similar to the corporate downsizing and improved efficiency of American industry in the 1980s and 1990s. Care is being shifted out of the hospital and excess capacity is beginning to shrink.
Economic projections are also uncertain.
We have experienced strong real economic growth in the last 3 years, between 3 and 4 percent. Most projections assume economic growth in the future between 1 and 2 percent. Future projections on governmental expenditures as a percent of the total economy are very sensitive to economic growth assumptions. All Rights Reserved.