C.J. M, Bridget V, Adam L, Amanuel M and Medicare

Posted: June 10, 2011 in Papers/ Analysis

The United States’ wallet is hanging precariously over the abyss of bankruptcy.  With 14 trillion dollars in debt and rising, rewriting the budget is not a convenience, not a nicety, but a necessity to America’s continued existence. But in order to rewrite the budget, in order to ensure a brighter future to our children, in order to move America into a new era, we must revise many social programs, particularly Medicare.

Medicare is health insurance administered by the United States Department of Health and Human Services, which serves Americans 65 or older, those under 65 with certain disabilities, and people who meet other special criteria. The program was originally enacted as a part of the Social Security Act of 1965 meant to amend previously existing Social Security legislation and was signed into law by President Lyndon B. Johnson. It is funded by payroll taxes paid by the American people (About 2.9%).

Eligibility for Medicare automatically opens for American Citizens or those who have lived legally in the United States for at least 5 years and are 65 or older. Americans under that age limit who qualify for Social Security Disability Insurance (SSDI) are also eligible and those with certain other criteria also qualify. Many Americans happen to be eligible for both Medicare and Medicaid, which makes them “dual eligible.” If they cannot pay the premium for Medicare, they use money they receive from Medicaid to pay.

Medicare operates on four parts, labeled A, B, C, and D. Part A pertains to coverage of hospital costs for stay and other fees. Part B mostly covers insurance for outpatient procedures such as X-Rays, diagnostic tests and other physician services. Part B also covers medical instruments such as wheelchairs, canes and prosthetic devices. Part C is an alternative plan in which those people who qualify to receive both benefits A and B can choose to receive them through another provider organization under Part C. Finally, part D covers medication prescribed by doctors for their patients.

Since the US National Debt is on the verge of going from the “Critical” level to the “Fatal,” spending needs to be reduced greatly, and there’s no better place to start than Medicare – it accounts for about 20% of our budget, or $599,000,000,000, as of 2008. There are a few ways to reform Medicare in order to reduce the nation’s spending obligations, of course paired with cuts to the program. Perhaps the most logical is to raise the age at which a citizen qualifies to receive benefits. In fact, this was how the program was initially designed – the qualifying age was actually higher than the life expectancy of the average American. However, this would have to be done gradually so that it does not cause an uproar with the 65-or-better crowd. Thus, the qualifying age could be raised a few years every decade, or the new qualifying age could be made effective to those born after a certain date. For example, the government could mandate that those born after January 1, 1990 will qualify to receive Medicare benefits after they reach the age of, say, 70. Doing this would significantly decrease the amount of Medicare recipients, and, thus, would reduce the government’s obligations to the program.

Another remedy to the nation’s increasing Medicare obligations is to make the tax that pays for Medicare optional. Granted this would take out just as much revenue as it would recipients, if optional Medicare were supplemented by a revenue-increasing reform, such as an age-raise or a tax increase, then the government would be able to save money and curb the increasing cost of healthcare. The only issue this raises is the case of a person who thinks that they are financially secure and choose not to pay the tax, and then wind up in a situation where they cannot pay for healthcare. In this case, the government would have to (be warned: this next concept is scary) actually hold these citizens accountable for their choice. Chances are, however, that these people would have access to financial or medical help from their families, communities, churches, etc., and would probably be okay in the end.

A third option would be means testing the Medicare recipients. This would indeed raise revenue and reduce the amount of recipients, but it poses many problems. In this system, a citizen would have to be below a certain economic status to qualify for Medicare benefits. In more plain English, the rich would not be allowed benefits and would have to pay into the system anyways. Given that the government already forces the rich (top 1% economically) to pay for 21.5% of all federal and state taxes, it just seems more unfair that they would be forced to pay into a system that they are not allowed to draw out of. Sure, the rich wouldn’t need assistance, but it is still unfair to make someone pay for something and then not give them the option to receive it. However, if there were a cutoff income for which those who are above the line do not pay the tax and do not receive the services provided by Medicare, then the system would be fairer.

So in the end, the most promising solution to the Medicare problem seems to be gradually raising the eligibility limit since it accomplishes the goal of reducing the breadth of Medicare coverage and spending without potentially reducing revenue for the government like the optional tax and without unfairly taxing a small demographic group. What is most imperative is that the United States needs to find a suitable solution to the looming disaster on the horizon. With the estimated 70 million Baby Boomers expected to join a system that was made for a considerably smaller generation, the country will find itself descending into an economic tailspin if this issue is not dealt with in the next few decades.

 

 

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