NCPA - National Center for Policy Analysis

POSSIBLE WAYS TO FIX MEDICARE

June 26, 2007

Medicare -- the nation's cornerstone health program for the elderly -- would normally be a taboo subject in an election year.  But lawmakers have no choice.  For the second year in a row, Medicare's finances have hit the trigger point, says Kathy M. Kristof in the Los Angeles Times.

Unfortunately, solutions to the problem are neither clear nor easy, says Kristof.  Here are a few that have been suggested to resolve at least a portion of the system's woes:

  • Raise the age at which recipients can collect full benefits like Social Security did in 1983; it makes some sense because people are living longer and are better able to work into their late 60s.
  • Cut waste -- whether cutting back could save the system is debatable, but everyone seems to agree that more effective management of Medicare dollars could save billions annually.

Another option is to let patients drive the spending, according to Andrew Rettenmaier, Research Associate at the Private Enterprise Research Center at Texas A&M University and senior fellow at the National Center for Policy Analysis (NCPA):

  • One of the problems with health spending -- both in Medicare and private industry -- is that consumers are impervious to the costs when somebody else is paying the tab.
  • Giving consumers economic incentives, for example by providing "vouchers" that patients can use or save, would help them become more cautious about getting cost-effective treatment.

Whatever the solution is, the time to address it is now, says Kristof.  The program has an unfunded liability six times that of the Social Security system and is catapulting down an unsustainable spending path, according to Thomas R. Saving, a Medicare trustee and senior fellow with the NCPA.

Source: Kathy M. Kristof, "Tough Rx: possible ways to fix Medicare," Los Angeles Times, June 24, 2007.

 

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