Public Agenda Issue Guide: Medicare

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You Can't Do It Alone: A New Guide to Creating Sustainable Change in Education Reform

Allison Rizzolo
Jan 24, 2012

Far too often, throughout our work in the education field, we've seen even the most earnest and promising ideas from experts and reformers for improving schools and ramping up student learning met with confusion, anxiety or even anger from teachers, parents, students or community members.

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Community Conversations: Working together to improve student success

Allison Rizzolo
Oct 20, 2011

The guest list for a community conversation in Coolidge, Arizona two weeks ago included small business owners, faculty and administration of colleges and universities, students, K-12 teachers and principals, representatives from local community-based organizations and even the chief of police. It was an impressively diverse group gathering to talk to about how to improve the success and completion rates of college and university students in their community.

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OVERVIEW

Medicare

Medicare, the national health-insurance plan for the elderly and disabled, often gets lumped in with Social Security in terms of the people it serves, its popularity and its fragile future -- except that it's in much worse shape financially. The program serves 46 million Americans and costs more than $430 billion per year, nearly 13 percent of the federal budget. But current projections say Medicare will be unable to cover its bills by 2029 -- long before Social Security, which should be able to cover its costs until 2037.

Like Social Security, Medicare is up against an increasing demand for its services as the 78 million-strong Baby Boom gradually retires. Unlike Social Security, Medicare also has to cope with the skyrocketing cost of health care. Most budget experts, in fact, say this combination of rising health costs and demographics makes Medicare the biggest financial problem facing the federal government in the long term.

The health care reform law passed in 2010 has significantly improved the outlook for Medicare, according to the annual trustees report (previous to the health care legislation, Medicare's trust fund was projected to be empty by 2017). As part of efforts to overhaul the health care system in general, the law expands the Medicare payroll tax, cuts payments to doctors and hospitals, and implements changes designed to cut overall health care costs.

However, many of these changes require follow-up action by Congress, and if Congress balks at them, Medicare's financial state will get worse.

GET THE FACTS

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CONSIDER THE CHOICES

Keep benefits intact

Reduce benefits to a level we can sustain

Put individuals in charge of their own health care

When Medicare was created, it amounted to a promise that whatever health care retired individuals need will be covered at public expense. That promise must be honored, even if it means raising taxes or reducing spending in other areas. As things stand, elderly persons are paying more than ever for out-of-pocket medical expenses that are not covered by Medicare. Minor adjustments can be made to reduce the program's cost, and aggressive measures should be taken to reduce fraudulent claims. But it is immoral and unthinkable to reduce medical benefits or deprive elderly persons of the freedom to choose their own physicians.
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Unless we revisit what Medicare promised, and cut back certain benefits, Medicare's trust fund will be depleted within a few years. When this program was created in the 1960s, no one anticipated that so many expensive medical technologies would be developed or that the cost of this program would escalate at 10 percent or more per year. Before the baby boomers retire, we need to pare down benefits, revise the eligibility rules, and make affluent retirees pay more of their own health care costs. To ensure that the needs of future generations are met, commitments to the elderly need to be trimmed to a level we can afford.
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Health care spending for older Americans will continue to rise as long as the current Medicare system is in place. The flaw in the current system is that individuals use Medicare indiscriminately since most costs are paid by the government. We would be better off, as a nation and as individuals, if Medicare for older Americans was replaced by mandatory medical savings accounts. In retirement, people would use these accounts to pay routine medical bills and premiums on high-deductible medical insurance. If individuals pay directly for their health care, it will help to keep costs down.
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