Anniversaries are a time to celebrate accomplishments.They are also a time to take stock.
As Medicare turns 61 this month, we should do both.Start with the celebration, because it is deserved.When Lyndon Johnson signed Medicare into law on July 30, 1965, only about half of Americans over 65 had hospital insurance and nearly a third lived in poverty.
Growing old in this country carried a real risk of being sick and broke at the same time.Today coverage for older Americans is essentially universal, and 69 million people depend on the program.
It is one of the most successful things our government has ever done — and I say that as someone who spends most of my working hours cataloguing things our government does badly.Now the taking stock, which is harder.Medicare has two major problems: the part of Medicare that can run out of money is about to, and the part that can't is quietly taking over the federal budget.NEWT GINGRICH: ALZHEIMER’S IS WAGING A WAR ON MILLIONS.
CONGRESS COULD HELP US WIN ITFirst the basics.Most Americans believe they prepaid for Medicare through a lifetime of payroll taxes.
It is a reasonable belief.It is wrong.All in, payroll taxes, premiums, and other dedicated receipts cover only about half of what Medicare costs.
Part A, hospital insurance, is the only part of Medicare financed by the payroll tax, through contributions to the Hospital Insurance trust fund.Parts B and D are not.
By statute, beneficiary premiums are set to cover roughly a quarter of those costs — in practice they covered about 22 percent last year — and general revenue covers nearly all the rest.Because Washington borrows heavily, a meaningful share of that general revenue is actually debt.The more pressing problem is that the Hospital Insurance trust fund is going to run out of money.
Because it has a fixed revenue source rather than an annual top-up from the Treasury, depletion triggers automatic cuts in what Medicare can pay providers.The trustees put depleti...