Medicare is the large federal program that helps pay medical bills for people over age 65. Most plans to fix the long-term federal budget involve some changes to Medicare. But as N.C. State University economist Mike Walden points out, those changes wouldn’t be easy to make.
“This is probably one of the toughest areas for our federal leaders to deal with. Of course, Medicare is the big program that does help pay … medical bills for senior citizens – totally federally funded. Now, we do as part of our payroll tax pay into Medicare. But studies show that people who are on the receiving end of Medicare get back far more money in terms of the expenses paid than they paid in.
“And if you look at projections of Medicare spending, they’re going through the roof, and the deficit, if you will, for Medicare bills. So, something probably will be done.
“Unfortunately, none of the options are very attractive. For example, we could increase the tax rate – the payroll tax rate paid by working people – that goes into Medicare. We could raise the age of eligibility for receiving Medicare, which is now 65, maybe up to 67 or 70. We could reduce benefits for more affluent retirees. Now that’s probably what many would say – ‘I’ll pick that one.’ But the problem there is that means you reduce the political support perhaps among those retirees for continuing Medicare. And then we could also reduce spending by Medicare on procedures, medical procedures that are not proven. Then again, how do you know if they’re good or not.
“So, each of these options is probably not very attractive, but what we do know is probably any long-term plan to get federal fiscal finances in some semblance of order is going to have to go through Medicare.”
Category: Economic Perspective