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February 13, 2012

Medicare – The Promise That Can’t Be Kept

The promise was simple: once you reach 65, Medicare will assure that your medical costs don't become a catastrophic burden to you or children who might feel obliged to care for you. Since President Lyndon Johnson signed the Medicare bill in 1965 and gave exPresident Harry Truman the first enrollment card, the definition of "catastrophic burden" has been lowered many times by both Republicans and Democrats, the cost of medical care has skyrocketed as has the number of possible (usually expensive) medical interventions, and life expectancy has increased. The promise cannot be kept!

Geezers like me who recently reached 65 on the average had put in only on dollar for each three dollars of benefits we'll receive. That's a huge UNEARNED benefit. We didn't know that we'd be ripping off those still working but we are. The cap has been taken off earnings subject to Medicare tax; rich people pay a higher tax on their earnings than poor people. Premiums for recipients have been raised for those who are still classified as high earners. Payments to providers have been cut back forcing other users of health services to subsidize Medicare. But the funding gap keep growing inexorably as the number of workers supporting each retiree shrinks, we live longer and longer, and ever more ingenious (and expensive) medical procedures are invented. Raising taxes on the rich wouldn't solve the current problem let alone the future one; there's no one to pay for our care but us and our kids. Charging the kids more now means there's an even bigger gap when they retire. The promise cannot be kept!

The future of Medicare is a lousy campaign topic because there is no good answer. Politicians made us a promise they can't keep. We believed what we wanted to believe. And now there'll be a Medicare default plus an expensive Medicare bailout. There's no one to sue. We have to pay the piper both in terms of benefits we won't receive and money we'll have to pay.

Cutting benefits to current retirees is both unfair and absolutely necessary. We were promised our medical needs would be taken care of, so we didn't make any provision other than the Medicare tax we were paying. We didn't think we were getting something for nothing. We didn't have the chance to choose a different option. But we getting $3 of care for each $1 we paid. Our premiums can – and should – go up on a means-tested basis. Which procedures are covered should be more tightly restricted, although we should retain the option of paying for them ourselves if we or our heirs can. I'd like the option of opting out, self-insuring for routine stuff, and buying only catastrophic insurance. It may be, however, that giving me that option and forgoing my already higher premiums would make the problem even worse. Perhaps the more well-to-do ought to be able to buy themselves part way out. There is no answer that's fair to those already in the system or close to retirement. It's just a question of limiting the damage. The promise cannot be kept!

We can't keep the promise to today's workers that they can have medical care from 65 to the grave at almost no expense to them or their heirs. We need to tell them the truth and let them make some choices now. Private insurance can provide plans for retirement coverage – but it is hard to convince a twenty-something to forgo current expenditures to pay for those impossible to imagine days as a geezer. But young people do pay into retirement funds; they do (sometimes) save for their own kids' college. Under compulsion, they're paying for Medicare now; but we're spending every penny they're paying. I don't think it's a terrible injustice for those who have money but failed to buy insurance to have to sell their (or their heirs) assets in order to pay for the medical care they want. We spend our retirement funds on our other priorities. I would've sold my house to pay for my stent if I'd had to – or chosen a lifestyle that let me work around a damaged artery. What's essential is to present these options to current workers today so that they can still make a choice. We cannot make them promises that can't be kept!

I'm sure you've noticed that I haven't talked about what should happen to those who couldn't afford insurance and can't afford medical care. That's a different, although still critical, problem. The Medicare problem is a promise made to us who had alternatives, a promise there is no one to pay for except us, which turns out to be a promise that can't be kept. The sooner we recognize the default, the less the pain of curing it.

Related posts:

Rep. Ryan's Budget: Change You Can Believe In

Medicare's a Fraud – And I'm the Beneficiary

We Can't Have All the Medical Care We Want

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