• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Medicare: Admitting You Have a (Structural) Problem Is the First Step

    A new study by the Urban Institute reconfirms a vital fact: Medicare’s massive increase in enrollment, largely attributable to retiring baby boomers, is driving its fiscal instability.

    This is an important finding, because during the health care debate of 2009, advocates of Obamacare insisted that excess health care cost inflation was the more urgent problem contributing to Medicare’s fiscal nightmare. A recent report by Charles Blahous, a public trustee for Medicare, explains:

    This viewpoint increased in prominence when Peter Orszag, one of [Obamacare’s] leading advocates, was named to head the Congressional Budget Office (CBO). Soon thereafter, CBO published a frequently cited graph that appeared to substantiate the view that the fiscal problems created by excess health care inflation dwarfed those arising from other known sources of fiscal strains, such as population aging.

    So the primary target of Obamacare was Medicare payment reduction, not structurally modifying Medicare to absorb the large enrollment increase in the coming years.

    Many opponents of the law believed that the CBO and the law’s advocates had overstated the effect of health care inflation and understated the enrollment issues. They were proved right. As as Blahous writes:

    CBO later modified its presentations to clarify that population aging would remain the more significant source of fiscal strain for decades into the future. In 2011, for example, CBO found that through 2035, population aging would account for fully 64 percent of the cost growth in the major federal mandatory health programs and Social Security, with excess health cost inflation being a relatively smaller factor.

    Therefore, the Urban Institute’s recent conclusion that “spending growth in Medicare and Medicaid is greatly affected by enrollment” is a welcome contribution to the emerging Medicare reform debate.

    For Medicare to become fiscally sustainable, structural changes must be made to accommodate for retiring baby boomers. To read The Heritage Foundation’s plan that would make the structural changes in Medicare and ensure that the program exists for future generations, click here.

    Posted in Obamacare [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.