Friday, 16 September 2011 00:00
Over the last several months, there has been a great deal of political chatter about the failing economic condition of Medicare. The truth is that Medicare would be bankrupt if it were a private business. Medicare spending is around $550 billion each year or some 20 percent of total annual healthcare expenditures.
In the last Annual report of the Social Security and Medicare Board of Trustees, the conclusion should be read carefully: “Projected long-run program costs for Medicare and Social Security are not sustainable under currently scheduled financing…”
If we do not change anything, there will be no funds available for Medicare by around 2020.
When Medicare was enacted in 1966, life expectancy for someone 65 years old would be around 13 years. Today, someone at 65 can expect to live for an additional 15 years. And if you go back to 1900, a person born in that year could only expect to live for 47 years. What a difference.
The strain on Medicare funding is the direct result of people in the United States living longer because of our outstanding advances in medical care. That coupled with baby boomers, in large numbers, reaching the age of 65 means more of a financial drain on Medicare. But, also look at the statistic going forward. Fifty percent of the babies born today will live to 100 years of age. Yes, 100 years!
It will be interesting to see if the newly formed Super Committee in the Congress will be able to come up with a total budget plan, including changes in Medicare. It will not be as easy as political ads showing a senior citizen, in a wheelchair, being pushed off of a cliff.
Like it or not, the solution will have to be in two steps. First, with all of us living longer, the age for Medicare eligibility will have to be raised. People are working longer, and raising the age level makes sense.
The other area of change will probably be in the 1.45 percent tax imposed on employers and employees for Medicare. I expect any deal will include raising those taxes.
One other controversial issue with regard to Medicare is the Independent Payment Advisory Board (IPAB). That Board will have the authority to cut Medicare spending. Since most of health care spending takes place in what is called “end of life” care, the issue really boils down to who is authorized to “pull the plug?” Should it be IPAB or your own doctor? Who should make the decision about when to perform a medical operation or provide medication?
Believe me, we have not heard the end of the debate over Medicare. If you have a point of view, you write to your United States senators and member of Congress.