Entitlement hysteria is in full view on Capitol Hill this week as the Senate Budget committee held its first hearing on legislation proposed to create yet another bipartisan commission. We’ve already expressed our position on this commission, see here and here . Unfortunately, this first hearing proceeded down exactly the path we’ve expressed concern about before.

During this hearing there was virtually no acknowledgement that the challenges facing Social Security and Medicare are very different. A one-size-fits-all discussion of "entitlements" ignores the unique challenges facing Medicare (a healthcare program) and Social Security (a retirement and social insurance program). Lumping these programs together in search of policy solutions makes no sense. There was also little discussion of national healthcare reform and its role in this debate, even though skyrocketing healthcare costs are what is jeopardizing Medicare’s solvency.
Curiously missing from the Budget Committee’s table of experts was CBO Director Peter Orszag who has said,

“We do a disservice by uniting the health care issue with the aging issue"

He has testified many times to other Congressional committees that the rising cost of healthcare represents a far more serious fiscal danger than aging baby boomers. Medicare, not Social Security, is what is driving up the costs of entitlements. Medicare costs are increasing so dramatically because of overall increases in the cost of health care, not because of our aging population.

Coincidentally two new studies also came out this week detailing just how critical the healthcare debate is for seniors and Americans of all ages. The Kaiser Family Foundation reports that between 1997 and 2003, median out-of-pocket health spending increased by 50% while individual income rose by just 15%. Insurance premiums where the largest chunk of that increase. The Commonwealth Fund surveyed patients in seven industrialized nations and found Americans spend double what people in the other countries do on health care, but have more trouble seeing doctors, are the victims of more errors and go without treatment more often.

Focusing so much attention on "entitlements" while glossing over underlying issues such as healthcare reform is a fatal flaw in this commission approach.