Health

The Medicare Math Fail

Entitlement equation doesn't add up

Republican presidential contender and former Florida Gov. Jeb Bush went toe-to-toe recently with a New Hampshire primary voter over what certainly will be a dicey issue for candidates this debate season.

During a town hall meeting, a feisty senior said she was concerned that Bush’s policy reforms would undermine Medicare.

“My Medicare right now is wonderful and I paid into it for all these years. Why are you always attacking the seniors?”

“Well, I’m not,” Bush responded. “Here’s what I said: I said, ‘We’re going to have to reform our entitlement system.’ We have to.”

“It’s not an entitlement,” the woman retorted. “I earned that.”

“It’s an actuarially unsound health care system,” Bush replied.

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So, who’s right and who’s wrong?

The truth is that the senior citizen will have paid for less than half of the expected cost of her lifetime Medicare expenditures, and possibly as little as 8 percent. Indeed, today’s typical Medicare beneficiary will have paid into the system just 13 percent to 41 percent of his or her expected Medicare consumption. Hard-pressed American taxpayers pick up the rest of the tab.

The senior citizen will have paid for less than half of the expected cost of her lifetime Medicare expenditures, and possibly as little as 8 percent.

Data from the Urban Institute, at Washington, D.C.-based think tank, shows a two-earner couple turning 65 in 2010 would have paid $158,000 in Medicare taxes over their lifetimes — but they’ll receive more than double that in Medicare spending, to the tune of $385,000.

For every dollar paid in taxes, they’ll take out $2.40 in benefits. And that ratio would be on the stingy side of the scale. Most recipients will receive much, much more in benefits.

“The highest such ratio we found was for one-earner couples in which the earner turned 65 in 2000 and was paid the average wage. Such a couple would have paid $39,000 in Medicare taxes but can expect to benefit from $306,000 — a ratio of $7.80 in Medicare spending for every dollar the couple paid in taxes,” says Politifact.com’s Truth-O-Meter, which is based on Urban Institute Data.

With 10,000 baby boomers retiring into the program every single day, such an unbalanced system of money in to money out is clearly unsustainable.

Like or loath Jeb Bush, he deserves kudos for not backing down from his initial comment.

Obamacare bludgeoned Medicare by cutting an estimated $716 billion from the program over 10 years. This means 40 percent of providers eventually will either go bankrupt or stop seeing Medicare patients.

When challenged, he said we need to have a “grown-up” conversation about entitlement reform.

“We need to protect (Medicare) for people that have it, and we need to make sure that we reform it for people that are expecting it,” he said.

Obamacare did the exact opposite. It bludgeoned Medicare by cutting an estimated $716 billion from the program over 10 years. This means 40 percent of providers eventually will either go bankrupt or stop seeing Medicare patients.

Obamacare’s Independent Payment Advisory Board will enforce the cuts — and likely cut further to meet projected spending targets. The law prevents Congress from overriding the board’s orders and shields the board’s decisions from judicial review — and patient input.

We can preserve Medicare, protect taxpayers, and continue providing seniors the treatments and medicines they need. Competition, consumer choice, and innovation is the answer, not more government price controls and micromanagement.

But that’s got to start with the “grown-up” conversation about entitlement reform.

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