Medicare Explained

Well, not quite. But at least the New York Times has discovered what a Ponzi scheme is. See article with diagram here. Let's hope the editorial page editors and Paul Krugman, in particular, read and learn from it.

CMS chief actuary Richard Foster needs to read the article as well. Foster told the AP the other day [here] that the Medicare Part A Trust Fund would be "exhausted" somewhere between 2016 and 2018 and beyond that Medicare could pay only 78% of estimated costs. Somebody needs to explain to Foster that the Trust "funds" have already been spent. Every asset (IOU) in the Trust Fund is a liability of the Treasury. Summing over both government agencies, assets minus liabilities equals ZERO.

Comments (5)

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  1. Joe S. says:

    The reason why con artists like Madoff are successful is that people want to believe in Ponzi schemes.

  2. Brent says:

    The point about Krugman is right on. He actually believes that the IOUs in the trust funds are real assets, fully comparable to bonds you can buy in the marketplace.

    If Krugman were right, we could solve our entitlements problems by printing more IOUs. Afterall, paper and ink are relatively cheap.

    Can you believe this guy won a Nobel Prize?

  3. Larry C. says:

    I think Joe is half right. It’s not that people want to believe in Ponzi schemes, it’s that they insist on denying that they are in one — even when all the evidence rebuts their belief.

    This capacity for self delusion is fully reflected in our leaders. How many members of Congress have ever admitted that Social Security and Medicare are lagalized chain letters? I bet you could count the number on one hand.

  4. Bill G. says:

    It’s not just Congress, Larry. I don’t think the New York Times has ever admitted that Social Security and Medicare are Ponzi schemes.

  5. John Goodman says:

    The New York Times not only does not understand public sector Ponzi schemes, it’s in love with them.

    In their editorial report card on Bush’s health care legacy, they praise the Medicare prescription drug program ― which has an unfunded liability larger than that of Social Security’s. [link]