There is no bigger financial problem facing the federal government than Medicare, and its shadow will fall on both seniors and younger taxpayers, because unlike Social Security, some of the astronomical cost of Medicare comes directly out of annual federal revenues.
"The way that they work is that as costs rise, they just result in bigger taxpayer burdens on future generations," says Chuck Blahous, a trustee of Social Security and Medicare and author of a recent book titled “Social Security- the Unfinished Work."
"Medicare's long term deficit is somewhere around 85 trillion dollars,” Andrew Biggs of the American Enterprise Institute explains. “Medicare is an enormous, enormous problem facing the federal budget."
And the problems with Medicare come a lot sooner than other entitlements. Paul Ryan, the new chairman of the House budget committee puts it this way.
"The economic day of reckoning is right around the corner. Because the tens of trillions of dollars of unfunded liabilities are right out there in front of us,” he says. "Medicare is going insolvent later in the decade. And Medicare is the greatest cause of our debt problems."
That's because Medicare faces a triple whammy. First, tens of millions more seniors are signing up as baby boomers retire. Secondly, an aging population uses more health care. And finally, prices on medical care just keep rising.
Even a liberal defender of the program warns of the problems he sees ahead.
"If we want the country to have advances in medicine, we are going to have to pay somewhat higher taxes,” says Robert Greenstein of the Center on Budget and Policy Priorities. "If we don't want the taxes to go up, we are going to have to have increasingly large rationing of health care."
But for those about to go on Medicare, Biggs and other analysts warn them not to have unrealistic expectations.
"People say 'I paid into Medicare all my life, I pay taxes therefore I deserve to have the full benefits that have been promised to me.' The problem is that for the typical person the amount of money they paid in Medicare taxes is nowhere near enough to pay for the benefits they will receive over their retirement."
Without some changes in the program, the young will suffer the most.
"If you're under 55-years old, guess what, we've got news for you; it's not going to be there for you,” warns Ryan. "You will have to severely and deeply ration Medicare to seniors at that time if we keep this program going as it is."
Ryan says there is one inescapable fact: the benefit-consuming generation is increasing by 100 percent while the taxpaying generation, the ones who'll have to fund Medicare, is only growing by 17 percent.
As they say in Texas, “You can’t get there from here.”
Jim Angle currently serves as chief national correspondent for Fox News Channel (FNC). He joined FNC in 1996 as a senior White House correspondent.