Medicare is in serious trouble. This is not propaganda nor is this a secret. And this is also not a surprise. This is so for three very simple reasons. First, when Medicare was first created, the average American male was living into his 60’s and the average American female was living into her 70’s. Today, men are living into their 70’s and women are living into their 80’s and even 90’s. Second, when the program was created the Baby Boomers were just that – baby boomers. Today, they are retiring at a faster rate than there are young workers to support them.
Third, when Medicare was created its cost was expected to rise with inflation. It didn’t take long to realize how absurd this notion was, having grown at several times the rate of inflation for decades now. For example, at its inception in 1966, the program cost about $3 billion a year. The House Ways and Means Committee projected that in 1990 it would cost about $12 billion (a figure that accounted for inflation). What was the real price tag in 1990? $107 billion. And the out-of-control growth of the program has continued at a rapid rate. Today, the program consumes almost 15% of the federal budget. (Remember, this is separate from the additional funds spent on other big entitlements like Medicaid, SCHIP and of course, Social Security which have their own budget issues).
So it’s clear something needs to be done to alter the structure of the program. That is, if we are to have any faith that it will be around for us below 55 years old or that we will be able to honor its commitments to those over 55.
Unfortunately, for many Americans, it’s a struggle to get this far in the conversation.
Moreover, once we get this far, we have only just acknowledged the problem. The trickier part is what follows – the conversation over how to put the program on a sustainable path. This is what Cong. Ryan’s aggressive budget proposal tries to do and why he should be lauded. Ryan’s plan attempts to springboard the political discussion past the question of whether we have a Medicare problem and demands that legitimate participants in the discussion talk about actual solutions for the way forward.
I’ll save for another post an analysis of Ryan’s budget and the Medicare solutions on the table but first, it’s important that we all at least acknowledge what has been glaringly obvious for far too long – Medicare as currently structured is unsustainable.