From former Obama budget director Peter Orszag:
Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they’re projected to rise to about 6 percent. Over the same period, federal health care costs will increase six times as much.
Orszag goes on to explain that Social Security does face a long-term deficit that should be addressed. But as the debate about balancing the budget rages away in the coming weeks, remember how central health care costs are to that problem. And that’s still true even if you’re optimistic about the Affordable Care Act’s cost impact.
Look at the NYT‘s nifty interactive budget-balancing game, for instance: Its’ top top 20-year cost saver entails limiting Medicare to a growth rate of just one percent above GDP growth, which would cut the deficit by a projected $562 billion. Raising the Social Security retirement age to 70 ($247 billion) doesn’t even get you half that. Even extending the Bush tax cuts for both upper- and middle-income earners only gets you $367 billion. You’ve got to control health care costs.
Update: Felix Salmon has some good context:
You can win the game without clicking on that [Medicare] box — I managed to do it — but of course the game becomes much harder if you deny yourself that easy and fanciful trick. But it is fanciful: there’s simply no credible way to enact that kind of hard cap on Medicare expenditures, in a world where the over-65 population is growing fast as the Baby Boomers retire, where that generation is also living longer than ever, and where end-of-life healthcare is becoming increasingly expensive across the board.