NCPA - National Center for Policy Analysis

Business Is Wary Of Costly Medicare Changes

September 15, 1999

Reforming the Medicare system shouldn't require substantial additional costs for employers, business groups contend. They point out that they already contribute significantly to health benefits for their employees.

  • When Medicare commenced in 1965, there were six workers for every senior who received benefits -- a ratio that is now three to one.
  • The nation's Medicare population will more than double to 75 million people in the next century.
  • Employers pay half of the hospital portion of Medicare, with employees picking up costs for the other half through a 1.45 percent tax on wages.
  • Corporate income taxes also contribute to general revenues that finance Part B, the physician portion of Medicare's payments.

Moreover, one-third of retirees 65 and older received health benefits from their former employers in 1997, according to a recent survey.

Business representatives contend adding a prescription-drug benefit to the stressed Medicare program is like building a swimming pool atop a rickety building. They argue drug benefit costs will balloon, inviting tax increases and price controls that could affect the development of life-enhancing medicines important to young and old Americans.

Source: Jerry J. Jasinowski (National Association of Manufacturers), "Medicare Reform: Proceed with Care," Investor's Business Daily, September 15, 1999.


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