Bush Right On Medicare – It Needs Reform

 

Serious presidential candidates take on serious issues. They don’t avoid the hot topics to avoid controversy in favor of political correctness.

Former Florida Governor Jeb Bush was recently challenged about his views on Medicare at a New Hampshire town hall meeting. The politically correct move would be to insist he wouldn’t allow any changes in this popular entitlement program for seniors.

But Bush was willing to engage the issue with honesty. Grace-Marie Turner, contributor to Forbes, tells of a senior citizen who attacked Bush on this issue saying, “My Medicare right now is wonderful and I paid into it for all these years. Why are you always attacking the seniors?”

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

The woman responded, “It’s not an entitlement. I earned that.

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

The truth is that the woman is wrong. She may have paid into the system for many years but she’s still getting out of the system more than she paid in. Turner says she will have paid for less than half of the expected cost of her lifetime Medicare expenditures and possibly as little as 8 percent. With these kind of numbers the system is indeed in need of reform.

Reality is that the typical Medicare beneficiary today has paid into the system just 13% to 41% of his or her expected Medicare consumption. The rest is funded by payroll taxes being paid by today’s working Americans. It’s really a giant Ponzi scheme that keeps paying out to others what is being taken in by those still working. But there won’t be enough money left in the pot when those working today need their healthcare.

Politifact, using Urban Institute data, concluded “today’s beneficiaries have gotten far more back in Medicare spending than they put into the system through their tax payments. . .

“A two-earner couple, with one high earner and one average earner, who both turned 65 in 2010 would have paid $158,000 in Medicare taxes over their lifetimes, but can be expected to be the recipient of $385,000 in Medicare spending. That’s a ratio of $2.40 in benefits for every dollar paid in taxes – and that’s the least generous ratio we found.”

“The highest 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 in Medicare spending – a ratio of $7.80 in Medicare spending for every dollar the couple paid in taxes.”

Medicare taxes

That’s a great investment – but an unsustainable federal entitlement program. Governor Bush is correct. Medicare must be reformed or it will not be there to help those Americans currently paying into the system. There are 10,000 Baby Boomers retiring into the program every day.

The costs of entitlement programs like Medicare are rising every day. Over the next decade, 85% of the projected growth in federal spending will be because of entitlement spending and interest on the national debt. This is a matter for serious discussion.

Bush did not back down from the confrontation. He responded, “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.”

There are solutions to this problem if the voters will behave like grown-ups and elect leaders willing to tackle difficult issues like Medicare. Programs like Medicare Advantage, a managed care form of Medicare, are saving money and are popular with seniors. Currently one –third of seniors participate in these plans. Other programs that emphasize consumer choice, competition, and innovation, are needed if we are to control the cost of Medicare and preserve it for future generations.

 

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