The Insolvency of Medicare The biggest threat to our country is not global warming, terrorism, drugs and violence or even wars, it is our entitlement programs. The big three are Medicare, Medicaid, and Social Security. Medicare, being the largest, is the health insurance provided for people 65 and older and for younger people with disabilities. The debt that this program alone creates, will transform this country for the worst. With the baby-boomers starting to retire, Medicare spending is expected to skyrocket. Although many feel Medicare is necessary, it is economically problematic for the future of our country. One problem is Medicare’s relationships with physicians are deteriorating. With politicians realizing there are problems, it is easier for them to cut the payments to doctors then to cut the benefits to the patients. Between 2001 and 2010, doctor payments from Medicare have risen only one percent but the physician costs have gone up 22 percent (Childress). According to a 2011 article by Daniel E. Fass, MD, “physicians are in for a 29% slash in Medicare reimbursements this year.” More and more physicians are deciding not to accept Medicare patients. For example, the clinic Qliance decided not to accept both Medicare and private insurance. Only one person is needed to do the billing for 12 doctors. They were able to cut their costs by 40% just by reducing the enormous paperwork and cutting the red tape that held them hostage to the government system (Childress). Without some change in policy, more physicians are going to opt-out of Medicare leaving patients with less and less options. Another problem is Medicare’s current spending level is running a deficit. At today’s rates, only a staggering 50% of Medicare’s expenses are funded from beneficiary premiums and payroll taxes (“Medicare Spending”). That means the other 50% is subsidized from other sources, including borrowed money from China. Most Medicare beneficiaries today pay less in to the system then they collect from Medicare (Regnier and Gengler). Medicare was setup to be an insurance. The purpose of insurance is to hedge against the risk of uncertain loss. Every other insurance company out there needs to be able to adjust premiums to cover their expenses. In 2011, Medicare was in the red by the tune of $231 billion (“Medicare Spending”). To sum up, Medicare is running a huge budget deficit and as you will see is only going to get much worse. Furthermore Medicare’s long-term outlook looks bleak. Congressional Budget Office (CBO) Chief David Walker notes “taken together, Social Security, Medicare, and Medicaid under current law represent an unsustainable burden on future generations.” Medicare represents almost half of the spending of those three programs (McCarty). Even according to the narrow-focused standards of the CBO and Medicare’s trustees, “the program has a long-term unfunded liability of more than $30 trillion and is about a decade from insolvency” (Levin). As well, the yearly cost in 2011 was $555 billion and is expected to climb to $903 billion by 2020 (“Medicare Spending”). The CBO projects that by 2050, Medicare’s costs will almost triple compared to today’s costs. As Yuval Levin nicely puts it, “Health-entitlement costs will thus account for essentially the entirety of our debt explosion, and Medicare will account for the bulk of those costs—as our population ages and the program’s grossly inefficient design pushes health inflation ever upward.” At its current path, Medicare would soon spend the entire federal budget and “taxes could not be raised high enough fast enough to keep up with its growth without crushing the economy” (Levin). Due to baby-boomers, Medicare enrollments are expected to reach 80 million by 2030 compared to today’s 47 million (McCarthy). Medicare’s outlook is overpriced, over budget and the longer we take to fix it, the harder the solution will be. The future of Medicare will certainly be a big part of this year’s elections. With so many problems in the system and the huge burden on the budget, the program will definitely need to be changed. Hopefully our politicians will have the political will to do what is needed. The only reasonable plan on the table now is one from republican Congressman Paul Ryan. With his plan, the government will subsidize private insurance premiums for the elderly. Therefore that will encourage competition and will limit how much the government is liable per patient. Without a reasonable reform, we can expect either no more Medicare in the future or an economy completely crushed by the weight of the taxes needed to pay for this program.

Works Cited
Childress, Karen. “Saying no to Medicare: the decision to opt out of Medicare requires careful considerations; here’s what you need to know.” Medical Economics 23 July 2010: 18+. Academic OneFile. Web. 25 Mar. 2012.
Fass, Daniel E. “Annual Medicare payment battle: physicians are once again staring down into the abyss.” Medical Economics 25 Nov. 2011: 70. Academic OneFile. Web. 25 Mar. 2012.
Levin, Yuval. "The Medicare Monster; An entitlement problem too big to ignore." The Weekly Standard 26 Sept. 2011. Academic OneFile. Web. 26 Mar. 2012.
McCarthy, Meghan. “Medicare must change, but when?” National Journal (2011). Academic OneFile. Web. 25 Mar. 2012.
McCarty, Mark. “CBO: Social Security, Medicare 'imprudent and unsustainable'." Medical Device Week 18 Jan. 2007. Academic OneFile. Web. 26 Mar. 2012.
“Medicare Spending and Financing.” Medicare Policy Fact Sheet. Kaiser Family Foundation, Sept 2011. PDF file.
Regnier, Pat and Amanda Gengler. “What No One Is Telling You About Medicare.” Money 40.9 (2011): 106-116. Academic Search Premier. Web. 26 Apr. 2012.