Drug Benefit a Toxic Prescription for Young Workers
October 7, 2003
Dreams of reforming the Medicare program have been around for decades and are now reaching peak levels. Chris Edwards and Tad DeHaven of the Cato Institute argue that adding an unfunded prescription drug benefit to Medicare moves directly against reform because it puts the program's spending on an even more unsustainable path.
- In the 1960s, the total consumption of an average 70-year-old was about one-third less than that of an average 30-year-old, but by the late 1980s, an average 70-year-old consumed about one-fifth more than an average 30-year-old.
- By 2040, Social Security, Medicare and Medicaid will account for nearly 80 percent of the federal budget.
- The number of elderly will soar by 114 percent by 2040 while the number of workers will grow by just 24.2 percent.
A wide range of entitlement reforms are needed to deal with rising entitlement costs, say the authors. They recommend turning entitlement programs such as Social Security and Medicare into savings-based systems. Also, the taxation of savings should be reduced to allow families to build bigger retirement nest eggs. Lastly, they note that the elderly today are in better physical shape and better able to earn income to support themselves than ever before.
Source: Chris Edwards and Tad DeHaven, "War between the Generations: Federal Spending on the Elderly Set to Explode." Policy Analysis No. 488, September 2003, Cato Institute.
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