Last week, the Medicare Trustees reported that the Hospital Insurance Fund will run out of money five years earlier than previous projections of 2029. The reasons for the shortfall and possible means of preserving the fund further into the future are both important.
The aging of the “baby-boomers” is certainly an important stress on the finances of the system. But, the effect of that has been known for some time, so is not a reason for the change in the timeline. There was mention of the recession as one factor. However, media are making no direct link to the high rate of unemployment and underemployment as contributing factors. These are aspects of the recession, but should be addressed directly. And, these have changed over the last several years.
Funding for Medicare comes from the Medicare Withholding Tax paid by workers. However, when one is not employed, they are not paying into the Medicare system. Since the tax is a percentage of one’s salary, those who are underemployed are paying in less than they would in full employment. With several million people un- or under-employed in the nation, the fund is seriously “shorted.” Getting people back to full employment will significantly help extend the life of Medicare.
The situation would be far worse without the Patient Protection and Affordable Care Act (ACA, 2010). Medicare money would have been exhausted by 2016 without the ACA. Therefore, another partial solution: continue to protect the provisions of the Affordable Care Act which reduce Medicare expenditures. According to Donald Berwick, MD, administrator of the Centers for Medicare & Medicaid Services, “CMS is implementing critical reforms to improve care and reduce costs and improve the overall health of Medicare’s beneficiaries and the trust fund.”
The House-passed FY 2012 budget plan would obliterate the gains made by the Affordable Care Act and cause many seniors to forego necessary medical attention. Preserving Medicare is not only preserving the trust fund, it is preserving the benefits which contribute to the health of our elders.