Prospectus

Medicare is on the verge of actuarial insolvency. Right now, payroll taxes only cover 91% of annual Part A spending. The remaining 9% is funded from other sources, including a trust that will be out of money by 2033. Once the trust is depleted in seven years, the federal government will have to cover these shortfalls on a “pay as you go” basis. The present value of these annual deficits—what we can think of as an unfunded liability—is a staggering $4.2 trillion. Over the next 10 years, the number of Medicare recipients is going to increase by a million people every year, from 71.5M in 2027 to 80.5M in 2036. The program’s annual financing shortfall—which flows into the overall federal deficit—is projected to more than double, from around $600B in 2026 to $1.3T in 2035. It’s a major reason why the CBO expects the federal deficit to grow from $1.9T this year to $3.1T in a decade. And these numbers are likely conservative. As AI creates innovative (and expensive) new therapies, it’s possible that many Medicare recipients will live meaningfully longer lives (glory to God). During each year of this actuarially-unplanned-for additional lifespan, they will consume more and more expensive care. These potential costs are largely not reflected in today’s actuarial tables, projections, or liability estimates. To be blunt: We can’t afford any of this. That $4.2T I mentioned above isn’t included in the national debt. It’s a liability on our country’s (metaphorical) balance sheet, but we haven’t yet borrowed the cash for it, so it’s not reflected in today’s $40T debt balance. The federal government is already incurring deficits of nearly $2T per year, with $3T per year staring at us in 10 years. The national debt at this point will be well over $60T. All in an environment of rising interest rates and capital markets that are growing increasingly apprehensive about federal borrowing levels. On a personal level, caring for the elderly in our lives is a blessing. On a macro-level, however, dedicating more than 5% of GDP to a federal healthcare program for the elderly and the disabled, with no trust remaining to fund costs, is a recipe for economic disaster. So here’s why I bring all this up in regard to Democrats talking about Medicare for All: Everything I talked about above—the unfunded liabilities, the growing annual deficits, the effect this will have on national debt, the fact that these numbers are likely understated—is based on Medicare NOT for all. All the numbers above assume Medicare will continue to cover only those above age 65 or living with a disability. So imagine how much worse all these fiscal challenges will be when Medicare covers 100% of the population, not just 20%? Every birth, every death, every trip to the hospital, every annual physical, every illness or ailment, every surgery, every emergency. Entirely covered by American taxpayers (and bondholders) on a pay-as-you-go basis, with zero reserves set aside to pay for it. 18% of GDP. 12% of the American workforce. All paid through the US Treasury. People like AOC and Abdul El-Sayed will tell you this is incorrect, that the system will become more efficient once greedy capitalist insurance companies and hospital networks can no longer profiteer from the market failures of these oligopolistic industries. At best, they are categorically wrong. At worst, they are outright lying to you. The idea that the bureaucrats who ran USAID and the Department of Education will be able to operate one of the largest and most complex industries in our economy better than the private sector can is prima facie laughable. The notion that it would lead to superior patient outcomes is absurd. What will happen is simple: Virtually the entire US healthcare industry will end up nationalized. Not just insurance, but every part of the value chain, from hospital networks to biotech companies to medical-device manufacturers. For all intents and purposes, there will no longer be a private-sector medical industry in America. Within a decade, nearly all of it will be owned by the government. Here’s how it will happen (for anyone still reading, I promise, we’re almost done!): To control costs, the government will cap increases to fee schedules, limiting what it reimburses hospitals and doctors for care. Because the market will at that point be single-payer, providers will have zero negotiating leverage—either you take what Medicare offers to pay, or you lose all your revenue. As hospital networks lose the ability to operate profitably, they will have to divest assets. But no one is going to be willing to pay for them, since there is now only one buyer in the market (economists call this a “monopsony”), and that buyer is not incentivized to allow any profit to remain in the system. The only option will be to sell to an investment fund created and operated by the federal government. The ripples will spread throughout every facet of the medical industry from there. The same single-payer dynamic that played out between Medicare and providers will occur with pharmaceutical companies, medical-device companies, and anyone else operating in a medical supply chain. The government becomes the sole purchaser, they squeeze margin out of their customers, their customers are no longer viable as independent going concerns, and they sell (“sell”) to the government. Close to one-fifth of the American economy. One out of every eight jobs. All government-owned, operated, and controlled. Every visit to the doctor starts feeling like a trip to the DMV. Any treatment deemed “non-essential” requires months, if not years, of waiting (ask your friends in Canada what that’s like next time they’re visiting the US to avoid a six-month wait for an MRI). America’s pharmaceutical companies have no profit to reinvest or sources of capital with which to fund the next generation of R&D. Only the wealthy and the politically connected are able to receive a level of care comparable to what any middle-class worker with a bronze-tier insurance plan receives today. What does that sound like to you? Ask yourself: Why would avowed socialists advocate so zealously for this? Remember: The purpose of a system is what it does. And we know exactly what this system would do.