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Joe Antos: Saving Medicare: A market cure for an ailing program December 19, 2012

Medicare is at the center of the ongoing debate over the country’s fiscal future, but there is a palpable fear that any change could “end Medicare as we know it.”[1] Policymakers worry that an honest assessment of Medicare’s finances would be punished at the polls by seniors who do not want their health benefits threatened. As a result, the debate over Medicare has been couched in comforting but misleading terms. Candidates for office say they want to strengthen the program, not undermine it with reforms that are, in fact, necessary if Medicare is to serve future generations.

As the largest federal health program, Medicare finances the care of more than 50 million Americans at a cost approaching $600 billion in 2012.[2] As the largest purchaser of health services with the regulatory powers of government to back it, Medicare and its policies shape the way health care is delivered to all 312 million people living in the United States. One dollar out of every five that is spent on health care in this country is paid by the Medicare program. Despite the recent recession-induced slowdown in spending (for both Medicare and overall health spending), the program spending is expected to accelerate. Unless reforms are adopted, Medicare spending will outpace growth in the economy for the foreseeable future.

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