The Ryan Budget and Medicare – Headed The Wrong Way

As today’s older Americans look forward to retirement, they worry about whether Medicare will meet their needs – indeed, whether it will even be there. Both worries are justified. Medicare has been a godsend to senior citizens, but its protections are eroding and need to be improved. Unfortunately, many politicians in Washington want to place artificial limits on Medicare or even dismantle it altogether. It is worth clarifying who wants to do what, and what the stakes are.

The Accomplishments and Limits of Today’s Medicare

Medicare was established in 1965 to help retirees pay doctors’ fees and to cover part of the cost of hospital stays. Before then, older Americans often could not afford basic medical care or were forced into penury by attempts to pay for it. Since 1965, Medicare has helped improve longevity and quality of life for senior citizens; and it has also helped relieved extreme poverty. Moreover, Medicare has controlled rising health care costs more effectively than private insurance plans.

Medicare is not a complete solution. Originally, it did not cover prescription drugs, but such coverage is now offered – and is slated to improve as the new health reform law closes the “donut hole” in prescription coverage. On the other hand, Medicare fails to cover some important services – such as long-term care outside of the hospital – and beneficiaries have been paying for more of their care. The typical (middle of the pack) income of Medicare beneficiaries is only $22,800 a year, and the percentage of income spent on Medicare premiums, copayments, and deductibles has increased from 10% in the 1980s to over 15% on average today. For some low-income elders, 30% of their income goes to pay out-of-pocket expenses, which can put routine medical care beyond their reach. In sum, Medicare is largely a success yet needs improvement as more Americans – fortunately – live into old age. So why do some want to go backwards?

– Larry Polivka, Florida State University

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