Happy Anniversary Medicare and Why Thomas Friedman Frets

Monday is the 47th anniversary of the enactment of Medicare and we should celebrate how this government program continues to transform the lives of seniors and people with disabilities by making healthcare available to these two vulnerable populations. Nevertheless, the program has always been challenging to manage. Almost since its inception, the Hospital trust fund which is financed through payroll taxes and supports the Medicare Part A benefit has faced insolvency. Historically, Congress intervened -- by legislative action -- to address any projected shortfall as was the case most recently, when the Affordable Care Act extended the solvency of the Medicare program by eight years through 2024.

When President Lyndon Johnson signed Medicare into law on July 30th, 1965 there were 18  million Americans over the age of 65. Today, Medicare provides comprehensive health care coverage to 48 million Americans, including 40 million seniors and 8 million people under 65 with disabilities for a total cost of $549 billion (in 2011). Although Medicare is not the primary payment source for long-term services and support (LTSS) costs for older adults (e.g. skilled nursing care, community based services, etc.) in some quarters there is discussion that Medicare's partial reliance on beneficiary premiums to support its Part B and Part D programs will need to be mirrored in any effort to overhaul the Medicaid program and how Americans rely on that program to pay for their LTSS.

In Sunday's New York Times, columnist Thomas Friedman wrote a thoughtful column about the future draconian choice facing American political leaders: limited resources for projecting American power abroad  due to a rapidly aging society and its concomitant fiscal demands on the national budget. I'm not so much interested in Mr. Friedman's criticism of presidential candidate Mitt Romney "...a foreign policy vision without a real plan to pay for it — and manage all the trade-offs back home — is just a hallucination" as I am the fact that he authored the column at all.

It's fascinating to read one of America's foremost foreign policy columnists write,

Good luck, world! It’s been fun hanging with you, but we can’t pay for it anymore — not with all of us baby boomers about to retire with no savings. We have a new strategic doctrine coming: “U.S.foreign policy in the age of Alzheimer’s.” We’ll do what we can afford and forget the rest.

To bolster his case, Mr. Friedman recounts statistics he learned (recently) during a visit to the headquarters of the Jewish Federations of North America (JFNA) which represents over 150 Jewish communities across America. These are the statistics that keep state Medicaid directors up all night across the nation:

  • Doubling of the number of Americans over the age of 65 by 2030;
  • By 2050 more than 15 million Americans could be living with Alzheimer's disease;
  • 29 percent of all American workers have less than $1,000 in savings.

Mr. Friedman's column evidences the growing awareness of the challenges we face as the nation ages. Although he notes that sustained economic growth will be needed to avoid making very difficult choices, in truth, regardless of the level of economic growth the payment and delivery of LTSS will have to change: current trends are unsustainable for reasons I've listed in prior blogs. I'm curious about your thoughts on the subject. Please submit comments: I enjoy the dialogue.

Learn more on Twitter @aginginchicago.

 

Comments

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  • Medicare will fail, as will Social Security -- as will the Affordable Health Care Act. It is simple math.

    Good column.

  • In reply to Richard Davis:

    Mr. Davis,
    Thank you for your comment and for the compliment. The Congressional Research Service's recently published report "Medicare: History of Insolvency Projections" succinctly explains the funding of the Medicare program and chronicles the history of the causes of Medicare's fiscal shortfalls. Thank you for reading!

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    Bruce Lederman

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