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Winds of Change May Engulf Medicare

Thursday, 07 April 2011 10:22 AM Current | Bio | Archive

Medicare has often been in the spotlight due to its rapidly escalating costs. No Congress has ever dared take it on — at least until now.

Even some Democrats are willing to start cutting a program that was introduced in 1965 during a very different time in our nation’s development. It was a center piece of LBJ’s Great Society. The only thing great about it today is the crushing impact it will have on our economy in the years to come. We must act now if we are to stave off another financial disaster lurking in the shadows.

Medicare was positioned as low-cost hospitalization and medical insurance for the nation's elderly and currently has nearly 10 percent of the entire population on its rolls. When Medicare was enacted in 1965, it was open to anyone aged 65 and older, in line with life expectancy expectations of 70.2 years back then. Today, the average life expectancy is above age 78. Yet enrollment still begins at age 65. That’s a plan out of sync with today’s healthcare coverage planning.

Medicare — like so many other government programs of entitlements, subsidies and social welfare — has become unconnected to its original assumptions and goals.

The problem is our political class prefers to assume blissful ignorance when confronting difficult issues. No surprise here.

What is surprising is the genesis of bi-partisan support starting to emerge that is willing to at least consider new Medicare funding options. Leading the drive for the GOP is House Budget Committeeman Paul Ryan. Although he has yet to persuade Harry Reid, behind the scenes some of his fellow Democrats are looking for a compromise.

It currently costs the federal government $397 billion annually for Medicare and is expected to climb to over $500 billion by 2016. The Urban Institute recently released a study showing the average person who turns 65 this year will receive more benefits from Medicare than they paid in. Clearly, funding this benefit is not sustainable, especially when some 78 million baby boomers are beginning to become Medicare eligible. According to U.S. Census projections, in 2011 more than 2.77 million will turn 65. That's 7,596 people aging into Medicare every day.

The number of newly Medicare-eligible seniors increases every year after that peaking in 2025 when about 4.267 million people — or 11,691 a day become eligible.

The cruel reality is the U.S. must undergo a fundamental change in its approach to entitlement programs.

At one time, the American government believed it should and could take care of all of its citizens regardless on their contributions.

Whatever your need, the government would pay for it. A noble idea, but one that was seriously flawed since the cost of sustaining such programs was largely glossed over or simply ignored.

Now we see the folly of such thinking. Millions of younger Americans are already convinced that Social Security in its present form will not be available to them when they retire. And now millions of older Americans will come to realize that Medicare in its present form will no longer have the money to pay for their long-term healthcare.

Yet, before we despair about our retirement and health benefits, there’s a new wind blowing in Congress that puts the responsibility in the hands of the average citizen. We’re seeing some traction on Capitol Hill for allowing workers to put money into their own savings accounts tax-free that can be used for their retirement instead of relying on Social Security.

Medicare is the next program that can take advantage of such thinking.

One proposal being floated is that when people reach age 65 they would have a number of private insurance payment plan options, with the government paying the first $15,000 in premiums. Payments could be adjusted based on income and serious health conditions. The Ryan plan, if enacted, is scheduled to take effect in 2022, when Americans turning 65 will no longer be paid directly by the government. This will save billions of dollars without jeopardizing the quality of care.

Any move to dramatically change Medicare is sure to go nowhere in the present Senate but at least some Democrats recognize something has to be done – and the solution isn’t Obamacare.

We need bold thinking and a willingness to recognize a great nation doesn’t have to guarantee all things to all people. Healthcare is important, but even while the Constitution seeks to “promote the general welfare.” It doesn’t guarantee that Americans are entitled to government sponsored healthcare coverage.

It looks like Congress may be finally grappling with that reality.

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Medicare has often been in the spotlight due to its rapidly escalating costs. No Congress has ever dared take it on at least until now. Even some Democrats are willing to start cutting a program that was introduced in 1965 during a very different time in our nation s...
Thursday, 07 April 2011 10:22 AM
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