Baby Boomers Fear Medicare's Insolvency

by John M. Curtis
(310) 204-8700

Copyright December 29, 2010
All Rights Reserved.                                

            Fearing Medicare’s insolvency, the first cohort of baby boomers are eligible to draw Medicare benefits Jan. 1, 2011, raising new worries among beneficiaries about the program’s eventual bankruptcy.  While threats to Medicare’s insolvency have persisted since the program was first signed into law by President Lyndon Johnson July 30, 1965, growing numbers of the WW II baby boom generation put more strain the an already financially strapped health care system.  When President Barack Obama pushed for national health after taking office Jan. 20, 2009, he wanted to expand the 45-year-old single-payer national health system.  Before Congress passed Obama’s plan March 25, 2009, Sen. Joe Lieberman (I-Conn.) killed the Medicare-for-all option, fearing soaring deficits and national bankruptcy.  No one really knows whether expanding Medicare would have been that disastrous.

            All the hype about Medicare or Social Security’s expected insolvency stem from the actuarial imbalance between the numbers of workers paying into the system vs. the volume of baby boomers expected to retire and draw benefits.  While there’s plenty of ideas floating around, Congress hasn’t been agreed on an appropriate fix other than pushing up the age at which beneficiaries get benefits.  A new Associate Press-GfK poll indicates baby boomers believe by a 2-to-1 that they can’t count on future Medicare benefits.  Congress hasn’t come up with a fix to assure that neither current nor future Medicare beneficiaries are jeopardized, other that pushing back the age to draw benefits.  Whatever one thinks of Obamacare, there’s little disagreement among warring political parties about the need to fix Medicare and Social Security.  Raising up the benefit age is no fix at all.

            Medicare and Social Security require an urgent means test to assure their long-term fiscal viability.  Determining appropriate ages to draw benefits has to do with the health and work feasibility of beneficiaries at current retirement ages.  It makes no sense to push back the benefit age if beneficiaries have a higher incidence of illness and lower probability of securing gainful employment.  Both Social Security and Medicare are designed to provide a financial and medical safety net to needy retirees.  If beneficiaries have the means to provide for their own retirement income and health insurance, then the government should not pay for it.  Most beneficiaries expect to cash Social Security checks and use Medicare regardless of financial need.  Implementing a simple means test would save the fiscal solvency of Medicare and Social Security without jeopardizing valuable medical and financial benefits.

            Medicare currently covers about 49 million elderly and disabled beneficiaries, costing $500 billion annually.  It’s current cost structure led Lieberman to conclude it was too costly for a national health care program, covering at least 40-million more Americans currently without health insurance.  Barack’s insurance plan, providing coverage to every man, woman and child in America, would theoretically cost far less than Medicare.  When all the baby boomers eventually draw benefits in 2039, Medicare’s ranks could swell to 80 million.  Because the workers paying into the system could drop from 3.5 to 2.3, less revenue is expected.  Savings must come from not pushing back the benefit age but from a means test that forces future recipients to pay the Medicare premiums.  Social Security beneficiaries making a certain minimum retirement income must forfeit the benefits. 

           Millionaires and billionaires earning retirement incomes above $250,000 must forego Social Security income and pay for Medicare premiums.  With the additional income, both Social Security and Medicare can be saved for those clearly in need of retirement income and medical insurance.  Pushing back the retirement age doesn’t save enough benefits or increase income enough protect Medicare’s fiscal integrity.  Beneficiaries with means should pay for premiums, not collect benefits at the government’s expense.  Most Social Security and Medicare beneficiaries believe they’re entitled to benefits regardless of incomes.  Establishing a means test forces the well-heeled to pay their fair share.  Given the imbalance between workers and beneficiaries the means test is the only logical way to put Social Security and Medicare back on a sound fiscal footing.

            Medicare and Social Security desperately need a means test to prevent government benefits from going unnecessarily from the needy to the greedy.  No millionaire or billionaire with retirement income about $250,000 should receive any government benefit without paying for it.  Charging the well-heeled Medicare premiums and preventing Social Security payments from going to individuals with substantial retirement incomes should help assure the solvency of both systems.  Today’s baby boomers shouldn’t fear a loss of benefits when there’s an easy way to fix the problem.  Fifty-three percent of Medicare beneficiaries would like to see benefits preserved or expanded rather than cut.  To accomplish this end, wealthy Medicare beneficiaries must pay their fair share and stop expecting the government to foot the bill:  Anything less would be unacceptable.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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