January 13, 2012

Hey Washington: We Don't have to overhaul Medicare to Save it

Republicans and some Democrats claim that we have to radically change Medicare because we can't afford it. They're wrong on both counts.



Reuters


Medicare needs a structural overhaul in order to avoid bankrupting the federal government--or so Republicans and many Democrats would have you believe. The latest evidence of this consensus is the Paul Ryan-Ron Wyden proposal to change Medicare into a voucher system where traditional Medicare is one of the options, but there are artificial caps on the value of the vouchers.

There's only one problem with this consensus. It's wrong.

The push for Medicare reform comes from understandable concerns about health care. Rising medical costs are a serious problem. We spend more than people in other countries, we get less, our gains in life expectancy are mediocre, employers are struggling with increasing health care costs, and of course, 50 million people are uninsured.

Washington says we can't afford Medicare. What does the math say?Second, rising health care costs are the most important factor in the federal government's long-term deficit. The CBO projects that spending on Medicare, Medicaid, CHIP, and subsidies for insurance purchased through exchanges will grow from 5.4 percent of GDP this year to 10.3 percent in 2035, and that's assuming a slight slowdown in the growth rate of health care spending. (But there's a major caveat to that well-known talking point, discussed below.)

More at the link: http://www.theatlantic.com/business/archive/2011/12/hey-washington-we-dont-have-to-overhaul-medicare-to-save-it/250282/