We can't afford inaction

Yet instead of meaningful reforms, we're merely chipping away at the edges while pouring even more taxpayer cash into a broken system. Obamacare's focus is largely on expanding coverage to uninsured Americans, either by fiat (individual mandate) or by greatly expanding government assistance via Medicaid. This strategy isn't sufficient; it doesn't cut costs.

And we can no longer afford to fund this failure, with the national debt set to soar from $16.7 trillion now (or $53,000 for every man, woman and child) to $25 trillion by 2023, a 49% increase.

With our debt-to-GDP ratio already over 100% and rising, we're in the red zone of excess indebtedness. Economists warn that if we don't turn things around, we'll damage the economy's ability to grow; reduce our ability to respond to wars, natural disasters and recessions; and increase our vulnerability to financial panics. And we'll also increasingly be on the hook for interest payments, paying our bondholders in China and Japan instead of paving new roads or building new schools.

The problem is health care spending, not low taxes. In 2023, the Congressional Budget Office expects tax revenue to be nearly double 2012's total. Yet it projects the deficit at nearly $1 trillion. That's because spending will rise too fast, with average annual gains of 6.2% for Medicare and nearly 10% for Medicaid.

The truth is that as health care costs rise in this broken system, entitlement programs can't keep up. We're overpromising benefits to seniors: The average two-earner couple that retired in 2010 will enjoy $387,000 in Medicare benefits after contributing (assuming a 2% real rate of return) $122,000 in Medicare taxes. 

Generational warfare

In essence, out of fear of angering important voting blocs -- not just those on Medicare now, but a generation of baby boomers now reaching the age of eligibility -- we're asking future generations to foot the bill. If we simply cashed out the system, giving seniors back the Medicare taxes they paid in instead of charging it to the national credit card, the result would look a lot like Republican House Budget Committee Chairman Paul Ryan's "premium-support" plan.

If people wanted more health care, they'd have to pay for it out of pocket. If they had unhealthy lifestyles, they'd pay more out of pocket. And it would encourage holistic care options, not just fee-for-service Medicare that encourages doctors and hospitals to order more tests and more procedures to maximize revenue.

While I find the Ryan idea attractive, since it solves the budget problem and unleashes free-market forces on the health care system, voters rejected it last November.

And yes, this may sound like I want to leave some seniors out in the cold. But is what we're doing to young people any more fair?

This premium-support idea is already happening to young working adults, many with new families. Employers are increasingly offering health insurance subsidies instead of paying for coverage outright. Unable to pay much out of pocket, because of stagnant wages and higher living expenses, these young folks are forced into high-deductible, low-coverage health insurance plans.

All the while, their payroll taxes go to support Medicare seniors receiving more than they paid in.

It's no wonder these people -- the backbone of the economy -- are so stressed as the evidence builds the American dream is slipping away from them. (Read about the economic stress on young workers in this study by the American Psychological Association, and their inability to build wealth in this one from the Urban Institute.)

This brings me back to Musashi.

If we're going to end this slide into the fiscal abyss and stop the intergenerational heist, we need to address both the cost of care and the fact that so much goes to giving a few more days of low-quality life to the terminally ill. These resources could be better spent preparing the way for those just starting in life, while still providing our seniors with a more dignified end.

Bipartisan support does seem to be coalescing around means-testing for Medicare benefits, so that those who can afford it pay more. That's great, but we also we need to encourage increased use of hospice care while discouraging repeated and outrageously expensive hospitalizations.

Think that's inhumane? This heartbreaking New Yorker story by surgeon Atul Gawande about the current state of end-of-life care will change your mind.    

And consider what you'd do if you had to pay those expenses out of pocket, as so many young families have to. Death is inevitable. Would you impoverish your family in an ultimately unsuccessful fight against it?

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We need to celebrate our mortality, appreciate how delicate the balance between life and death is, and understand that a better life and a longer life aren't necessarily the same thing -- especially if it consumes resources desperately needed by the generations to come.

Musashi understood this. It's time we did, too.

Be sure to check out Anthony's new money management service, Mirhaydari Capital Management, and his investment newsletter, the Edge. A free, two-week trial subscription to the newsletter has been extended to MSN Money readers. Click here to sign up. Mirhaydari can be contacted at anthony@edgeletter.com and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.