Put individuals in charge of their own health care
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.
What Should be Done?
Replace Medicare with a system of medical savings accounts for the retirement years, similar to the tax-deferred retirement accounts that millions of Americans already manage for themselves. Require individuals and employers to contribute each month to medical savings accounts, rather than paying Medicare taxes. Provide means-tested government health care programs like Medicaid to individuals who are unable to help themselves. Encourage or require retirees to pay for routine medical expenses out of their medical savings accounts, just as they pay directly for other routine expenses. To cover the cost of unexpected and often expensive medical procedures, encourage or require retirees to use their medical savings accounts to buy high-deductible insurance policies. Used in this way, private insurance would provide protection against potentially ruinous expenses.
Arguments For This Approach
No matter what changes are made in Medicare benefits or eligibility criteria, health care spending for older Americans will continue to rise as long as the current system is in place. This replaces a fatally flawed system that encourages retirees to use Medicare indiscriminately, since most costs are paid by the government. Under this system, individuals who pay for their own health care have an incentive to shop around. Government's role in providing health care for retirees should be limited to assisting individuals who are unable to help themselves. This approach reflects America's traditional emphasis on personal responsibility and limited government. Under this system, retirees would have real security because they won't have to worry that the Medicare system may not be able to meet its commitments. People would know what to expect in old age, and could retire whenever they choose.
Arguments Against This Approach
Ensuring that elderly persons get good health care is a public responsibility, an expression of collective concern for older Americans. This is the premise of Medicare and Social Security, two programs that have served the country well and vastly improved the situation of retirees. Because of mismanagement of funds or bad investments, many retirees would end up with far less than they need to cover their health care needs. Under a self-financed requirement system, lower-income retirees would suffer. Elderly people who worry about how much is left in their medical savings accounts are likely to play Russian roulette with their health, deferring care they urgently need. There's no practical way to make the transition from Medicare to a system in which all working Americans have personal medical savings accounts.
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