Please explain what, if anything, is wrong with medicare and
what needs to be done to fix it.
Response:
There is a very real problem with Medicare. The Baby Boom generation
outnumbers the next two generations combined. In other words, there are not
enough taxpayers coming along to pay for the Medicare benefits of the Baby
Boomers. (Baby Boomers are generally defined as people born between
1940-1960.) The current pay-ins to Medicare only keep the system current,
they do not place money into and kind of investments. It is a common
misperception that Medicare is a "trust" or investment system. The tax rate
needed to provide the present level of Medicare to the Baby Boomers from
the next two generations (just for Medicare) is from 35% to 55% of gross
income. It is unreasonable to believe that Generation X, as the next
generation is called, will accept these tax rates for benefits they will
probably never receive.
Where did this concept of federal "trusts" come from originally? Certainly,
the granddaddy was Social Security. However, to even call Social Security a
"trust" is just a clever way to avoid political accountability. A real
"trust" is usually defined as a set of investments to protect the interests
of the beneficiary. It is normally of fixed duration and purpose. A trust
is recognized as an individual property right. There is no enforceable
property right to Medicare. The money paid by one individual does not go
back to that individual, but is redistributed as politicians see fit.
Although called a "trust," Medicare is a special tax primarily designated
for the purpose of providing medical care to the elderly.
Honesty with the American people is the solution. Medicare is not a
"trust." As a social welfare program, it should only be available to those
in need. No one is against a "safety net," but to have Generation X pay for
Baby Boomer benefits, when the Baby Boomers are more financially secure
than they are, is insane. We can afford a safety net. We cannot afford a
general subsidy for people who do not need it. Medicare is a welfare
program which needs to be rethought and reworked, as was done with Aid to
Families with Dependent Children (AFDC). The poorly constructed Medicare
program will continue until the taxpayers demand reform.
Howard B. Hanson