When Governor Mitt Romney chose Wisconsin Representative Paul Ryan as his running mate, Medicare jumped to the forefront of the campaign as each side drew their battle lines around the issue. Ryan, Chairman of the House Budget Committee, drew considerable attention last year when he proposed a major overhaul to Medicare as part of his 2012 budget.
Medicare is a federal health program created in 1965 for senior citizens and the disabled. It's one of the most popular, and most expensive, government entitlement programs, with more than 48 million Americans covered in 2011.
Medicare is funded through two government-run trust funds. The primary fund, which pays for Medicare part 'A' services such as stays in hospitals, hospices or nursing facilities, is projected to be exhausted by 2024. As baby boomers age, around 10,000 people are turning 65 and qualifying for Medicare every day. By 2030, enrollment is expected to reach 80 million people.
With so much at stake, it's plain to see why Paul Ryan calls Medicare, "the big budget issue." He advocates slowly raising the Medicare eligibility age from 65 to 67 by 2034. Anyone already age 55 or older would not be affected by his proposed changes.
Beginning in 2023, eligible seniors would receive a set amount of money to purchase either the traditional Medicare program or a private health plan approved by the government. Anything over the cost of the premium would be the senior's responsibility. Wealthy seniors would receive less money, and poor or sick beneficiaries would receive more. Currently, the cost of the traditional Medicare plan is $15,000 per year.
President Obama aims to keep Medicare in its current form, guaranteeing it as the primary option for seniors, while working to cut costs. Within his health care reform law, Medicare spending is slashed by $500 billion over 10 years. That money is used to pay for other provisions of the law. Savings will come from administrative changes, raising premiums on higher-incomes seniors, cutting payment increases to health providers and changing the Medicare Advantage plan. An independent payment advisory board is also responsible for identifying spending cuts without rationing care or reducing benefits.
Last year, the president proposed a plan within his budget to cut an additional $250 billion from Medicare in the next 10 years. That plan includes higher premiums and deductibles for some, lower payments to rural and teaching hospitals and instituting co-pays for people receiving home heath services. It would also require drug companies to provide rebates for prescriptions purchased by low-income users.
There may be no other government program that touches as many voters as Medicare. Americans who aren't beneficiaries likely know someone who is covered by the program and continue to pay into a system that may be broke when they are ready to reap the benefits.
What do you think the government should do to control Medicare spending and save the program for future generations?