The numbers behind our Medicare problems.

[dkf]

Here's a brief overview of how Medicare currently works: On average, the annual cost for its 46 million enrollees is roughly $13,000. The recipients pay total premiums of $1,326 a year for hospital visits and zero for physician services, and can purchase supplementary private Medigap policies that cover virtually all deductibles and co-pays for another $1,500 a year. So the enrollees pay a total of around $3,000, or 23% of the total $13,000 cost. Taxpayers cover the balance of $10,000.

For future retirees and budget-watchers, what matters most is how fast that $13,000 cost number rises, compared with the increase in the $10,000 that the government now pays. Ryan has a solution to the former. The latter is far harder to forecast. The gap between the two will grow, and chart what future retirees will need to pay for their own health care.

For many years, Medicare costs have been growing at between 2 and 2.5 percentage points faster than GDP, a ruinous, unsustainable rate. Even in today's weak economy, the total Medicare bill is waxing at over 7% (of GDP)

According to the Congressional Budget Office's analysis, issued on April 5th, the Ryan plan would totally reverse the course of recent fiscal history by lowering federal health care spending from 8% of GDP today to just 5% by 2050. If we remain on the current course, the spending would jump to 14% in that time frame.


http://finance.fortune.cnn.com/2011/04/07/in-defense-of-paul-ryans-medicare-plan/