Four Questions About Medicare

I am generally a supporter of the Ryan budget and Medicare plan.  While I’m skeptical of how the voucher portion will play out – will it really ensure that viable Medicare offerings for seniors are available in the market at $15,000?  But I think it’s worth trying.  And in the absence of any other serious plan to curtail cost, I have nothing legitimate to compare it to.  I’ll state unequivocally that I would support any plan, Republican, Democratic, or other, that fixes the problem.  But let’s take a step back and understand the problem.

The problem with Medicare is that the federal government has promised to cover medical care to seniors at an unlimited, and uncapped cost to taxpayers.  That means, that no matter how many seniors there are, no matter what care they need, taxpayers have promised to pay.

Medicare is wildly popular among seniors – OF COURSE IT IS – ITS FREE AND THERES NO LIMIT!

This approach however is expediting the bankruptcy of our country.  The average Medicare recipient pays in approximately $150,000 in Medicare taxes over the course of their lives.  The average Medicare recipient receives $350,000 of medical benefits over the course of their life.  So society must pick up the $200,000 short fall, which is funded from the tax dollars of all American.   It’s easy to see how this can’t work long term.

Its time to ask the really tough questions which the Ryan plan has the insight to answer in the form of tactical action, but not the courage to point out and put on the table for honest discussion.

  1. Is it truly the responsibility of the federal government to fund unlimited health care for those 65 and over?
  2. Is it not reasonable to ask seniors to pay higher premiums and deductibles for the healthcare that they receive?
  3. Is it unfair to provide seniors a basic level of healthcare, and ask them to get their own supplemental insurance for things like organ transplants, hip replacements, or heroic treatments to extend life a few more months?
  4. Is it OK to continue to borrow more money for benefits today, and stick future generations with the tax burden of figuring out how to pay for it?

These are really uncomfortable questions.  They should be at the heart of the debate, and no one is talking about them.

The federal government should be 4th in line to cover catastrophic or end of life medical care for seniors.

Who should be responsible for seniors’ healthcare? In order?

  1. The senior
  2. The seniors family
  3. The local community and charities (including hospitals)
  4. The federal government (as a last resort safety net)

We’ve had for too long the idea that avoiding using the assets of seniors and their families to pay for healthcare is the right thing to do.  There is a whole cottage industry of lawyers and accountants who strategize of how to hide the assets of those over 65 so healthcare and long-term care is picked up by their neighbors.

We have to start asking if it is morally right to pass our burdens on to someone else, and then complain when they stop accepting that burden.

How do you answer these four questions?

Guest Blogger Jeff

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4 responses to “Four Questions About Medicare

  1. Michael Dunne

    Good effort at trying to defend a plan that doesn’t seem like much of a plan.

    As for saying someone should take care of themselve (or that their family should), that sounds nice in theory. In practice, considering most of the country has stagnated in income for a decade now (or more), at some pretty modest levels (median household income is at around $50,000), probably not likely to happen.

    Implementation of such a practice would in reality end up sending many people to the poor house from health care costs that have been outdistanceing inflation for some time (and rightly so, since this is a labor intensive sector with credentialled staff and high technology density).

    Having folks pay more into the system, pushing the age out to 70, higher deductibles, wielding federal clout to negotiate better prices will probably prove more beneficial measures. Also, the country’s population is increasing, and expected to reach around 400 million by 2050 (the UN population folks), so there is some possibility of smoothing the demographic bump a little bit (which the Japanese, Russians and many Europeans don’t enjoy, nor will the Chinese in 25 years or so).

    If it really needs saving, then go for some more sin taxes and followed by income taxes.

    The fact is, the program has involved an impression of forced savings, has fulfilled its function to date reasonably well, and is the only trusted source for funding healthcare by most. When it comes to crunch time, aside from some extreme right or libertarian partisans, most people regardless of political persuasion will probably prefer the current contours of the program when they are sick (or dealing with sick relatives).

    • Hmmm. A little confused by your comment since nowhere in my post was a defense of the plan other than stating I was generally for it, if there were no other alternatives.

      I was proposing philosophical questions on the role of government in health-care for seniors.

      So I’ll try to interpret how you might answer the one of the four questions based on your comments. Should I assume an answer of Yes to question #1 – it is the responsibility of the federal government to provide unlimited, uncapped health-care for all citizens over 65? If yes – it does have huge implications.

      The Medicare gap right now according to the Peter G Petersen foundation, $38.2 Trillion. Meaning, we have promised $38.2 Trillion in Medicare benefits to currently living Americas that is not reflected in any projection, plan, or revenue by the federal government. Not even a plan of how to pay for it. There are only 4 ways to close that gap.

      1. Raise Taxes
      2. Take money from another program and cut that program
      3. Reduce the amount taxpayers fund for health-care
      4. Borrow more money

      I’m with you on deductables and raising the retirement age has to be part of the solution, but re-thinking the role of the federal government has to be the solution as well. I think we should focus on cutting other programs (defense and many others) and reducing the taxpayer funding of health-care (read fewer benefits) – which by definition would preclude the necessity of raising taxes.

      Pretty obvious, I answer question #1 with a no! I don’t think that the federal government owes it to me, or should be paying for my health-care when I am over 65. Every financial choice I make in savings and investment during my lifetime will reflect that belief.

      That said, any civilized society should want to provide a safety net, and I do as well, but you have to cross the philosophical bridge of not believing that the federal government owes us this, before you can get to a point where cutting benefits, having seniors pay more, and not simply taxing people in Iowa to pay for health-care in New York makes sense.

      The question then becomes – what is a reasonable level of funding that balances personal responsibility, personal liberty, and financial prudence. I believe we are well beyond reasonable already, and need to reign back benefits.

  2. Do you realize that out of every paycheck, Medicare tax is taken out of it as long as we work? As a person 54 years of age with a 26 year work history, a $15,000 healthcare voucher is a joke. I have two physicians in my family, one is a surgeon. As we discussed medical costs, no one short of being a multi-millionaire would be able to afford health services.

    As a contributor to entitlements, then one is entitled to it. It makes no sense to pay taxes if you don’t expect something in return for your money. Medicare is not going broke. The problem with Medicare is the lack of proper supervision on how it’s paid out, not the benefits themselves. “60” Minutes did a fantastic piece on Medicare Fraud and Abuse, I believe sometime last year. If you could find it, you should take a listen. You will be appalled on all the fraud and abuse that is going on with those programs and how many of our lawmakers are in on it.

  3. Michael Dunne

    Sonya,

    Good points. One question though (to anyone): Is there a cap on the medicare tax/contribution as their is with paying into social security (they seem to stop taking money out when people hit 100K or so).

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