Status Quo is Sending Medicare Over the Cliff

The latest Medicare trustees’ report inconclusively demonstrates that Medicare is going broke.  Former CBO Director Douglas Holtz-Eakin and former House Budget Chairman Jim Nussle explain in a post for National Review Online what it would have taken for Medicare to have had a positive cash flow in 2011.

If the program had not been able to draw on general revenues from the Federal government – thereby, adding to the budget deficit – huge tax and premium increases would have been required.

Holtz-Eakin and Nussle offer specifics:

  •  For Medicare Part A (which pays hospital costs), the cash deficit was $61 billion.

    To balance this deficit, payroll taxes on employers and workers would have to have been increased by 31 percent.

  •  For Medicare Part B (which pays physicians), the cash shortfall was $168 billion.

    To balance this deficit, seniors’ physician premiums would need to increase by 392 percent.  This means the annual physician premium cost to seniors would have risen from $1,198 to $4,687 — an increase of $3,499.

  •  For Medicare Part D (prescription drugs), the cash shortfall was more than $59 billion.

    To balance this deficit, seniors’ premiums for prescription drug plans would need to increase by 871 percent, meaning the annual drug-premium cost to seniors would rise from $372 to $3,250 — an increase of $2,878.

It is clear that the current path of Medicare spending is bankrupting our country.  The status quo is simply not an option.

SHARE THIS ARTICLE

About the author