With the baby boomers aging, many people question the feasibility and the future of Medicare. The estimated number of individuals dependent on the program is predicted to reach 80 million by 2030. By 2027, spending on Medicare will reach more than $1.2 trillion. However, the federal medical insurance program is underfunded, and an aging population will continue to put pressure on an already fragile system.
Policy makers are reluctant to undertake major overhauls of the program because of the political ramifications. However, the problem is getting worse and Washington needs innovative ideas to solve the problem. With increasing public demand and pressure, what does the future hold for Medicare? If the program is to have a future, reform is required, and it will take brave individuals from both political parties to set aside differences and look at viable and long-term solutions.
Appropriateness
Currently, individuals over 65 years of age, persons with certain disabilities, and those with end-stage kidney disease qualify for Medicare. One of the proposals being negotiated by politicians is to raise the eligibility age to 67 years. While believable given the increase in life expectancy since the creation of the program in 1965, such a proposal has become political suicide as a result of partisan politics. However, the program was created with the aim of serving American retirees. As people live longer, the program’s liquidity decreases as a result of prolonged coverage. In 1965, American men and ladies have a life expectancy about 67 years and 74 years respectively. Currently, the age is 76 years for men and 81 years for girls. Therefore, the proposal to increase the eligibility age makes numerical sense. Along with other proposals, slowly increasing the eligibility age to 67 could help save the program.
Medicare premium
By nonprofit and nonpartisan American Retired Association (AARP), Medicare beneficiaries pay a separate premium that covers doctor visits and drug prescriptions. This payment covers roughly a quarter of the actual cost of the service. For individuals with higher incomes, the premiums are higher and up to three times the price of a standard premium. Some ideas for overhauling the program target this audience, where the proposal includes increasing premiums to 15 percent.
From a fiscal viewpoint, the proposal makes sense because the program’s liquidity is an underlying problem and raising interest rates would improve finances. However, higher-income individuals already pay more into the plan before retirement and will face additional costs when receiving benefits. This may be a hard sell with the current political landscape and those with higher tax brackets may perceive this as an undesirable tax increase. This can be a difficult perception to overcome and can generate backlash amongst constituents.
Future
Program continuity is critical for those in retirement, and if nothing is finished, the future for Medicare is bleak. The program won’t have the mandatory liquidity to support the increasing elderly population. Even if many take political positions, the program must not become a partisan discussion — instead, voters and politicians must work together in a fiscally responsible manner that explores innovative ideas for funding and sustaining coverage without creating scenarios where such proposals lead to political death. Once such a discourse is in place, ideas have an opportunity to develop into viable implementations that can benefit all retired Americans. In the meantime, individual retirees or retirees can review information about Medicare Annual Enrollment to check the best coverage options. Hopefully politicians and voters can develop a collaborative attitude that proactively seeks solutions and allows the service to continue.
