Medicare has provided life-saving access to healthcare and financial security to millions of Americans for more than 45 years. Now this promise is under threat. "Reforming Medicare," which is code for "limit access to healthcare services for seniors," is a core component of the Fix the Debt platform.
The Campaign to Fix the Debt is the latest incarnation of a decades-long effort by former Nixon man turned Wall Street billionaire Pete Peterson to slash earned benefit programs such as Social Security, Medicare, and Medicaid under the guise of fixing the nation's "debt problem."
In 2012, Republicans in the U.S. House of Representatives voted overwhelming to eliminate the existing version of Medicare under the budget proposal drafted by Rep. Paul Ryan. Under the Ryan plan, Medicare’s guarantee of health coverage would have been replaced with a voucher that could be used to purchase either private health insurance or traditional Medicare.
The Ryan plan also would have raised the age of eligibility from 65 to 67.
Key Facts about Medicare
Before Medicare passed in 1965, only about half of people aged 65 or older had insurance coverage. Prior to Medicare, more than one in four seniors were estimated to go without health care due to financial concerns. Now healthcare coverage for seniors is nearly universal.
In 2012, 50 million Americans were covered under Medicare.
Without access to Medicare, most older Americans would be unable to afford healthcare coverage on their own. Half of people over the age of 65 had income less than $20,000 in 2011.
Medicare provides essential access to affordable coverage for a population that uses health care because they need it. Two-thirds of people with Medicare have multiple chronic conditions. More than one-quarter of Medicare beneficiaries report being in fair or poor health, and roughly the same share have a cognitive or mental impairment.
While Medicare provides health coverage to millions of Americans who would be otherwise unable to obtain affordable coverage, it does not cover everything. For example, Medicare does not cover dental or eye care. In addition, Medicare does not cover long term care services and supports.
Medicare is more efficient and less costly per person than private insurance. Medicare spending per enrollee is projected to grow at 3.1 percent, which is substantially lower than the 5 percent growth rate per enrollee for private insurance spending.
Republican Efforts to Eliminate and Privatize Medicare
In 2012, Republicans in the U.S. House of Representatives voted to eliminate Medicare as it exists and replace it with a voucher system. Because this proposal did not have support in the Senate, it did not become law.
Had the Ryan plan been implemented in 2009, half of the beneficiaries enrolled in the program would have paid higher premiums to maintain their choice of plan and doctors. This would be problematic given the limited financial resources of many seniors.
The voucher system would raise out of pocket costs in many cases because the amount of the voucher would be insufficient to purchase a plan similar to Medicare. Also, the amount of the voucher would not grow to keep up with the cost of health care, which would increase out of pocket costs over time. The Congressional Budget Office estimated that new beneficiaries would have increased out-of-pocket costs of $1,200 annually by 2030 and $5,900 annually by 2050.
Medicare Is Not Bankrupt
Medicare is not on the verge of "bankruptcy." Most of Medicare is self-sufficient. Discussions of Medicare financing focus on Medicare’s hospital insurance program. The Affordable Care Act of 2010 extended the solvency of the Medicare hospital insurance program by eight years. This was achieved while expanding coverage and without cutting core benefits. It was accomplished by reducing waste, fraud, and abuse; eliminating overpayments to private insurance companies; and rewarding doctors, hospitals, and other providers for quality care.
As of 2012, Medicare’s Hospital Insurance trust fund will be able to pay 100 percent of the costs of the hospital insurance coverage that Medicare provides through 2024. After that, payroll taxes and other trust fund revenue will be sufficient to pay 87 percent of Medicare hospital insurance costs.
The 2024 date does not apply to Medicare coverage for physician payments and outpatients costs or to the Medicare prescription drug benefit. These parts of Medicare cannot run short of funds.
One proposal offered by those seeking to "reform Medicare" and reduce Medicare spending is to raise the eligibility age from 65 to 67. The Ryan and House Republican budget resolution in 2012 would have raised the eligibility age to 67. One study, using 2011 data, estimated that, in a single year, 435,000 seniors aged 65 and 66 would be at risk of becoming uninsured.
Low-income seniors would be at particular risk, as they would have nowhere to turn for coverage if their states reject the Medicaid expansions in the Affordable Care Act. In 2008, nearly a quarter of seniors had income below 150 percent of the federal poverty level (the poverty level was $10,326 for a single elderly person, and $13,014 for a couple). Clearly, poor and near-poor seniors do not have the resources to purchase health insurance on the private market. If they lose eligibility for Medicare and do not have access to Medicaid, they will have few choices except to go without health insurance coverage.
2006 Proposed Plan Changes and a Conflict of Interest
In 2006, "[t]he Bush administration [said] it [had planned] sweeping changes in Medicare payments to hospitals that could cut payments by 20 percent to 30 percent for many complex treatments and new technologies," according to the New York Times.
"The changes, the biggest since the current payment system was adopted in 1983, are meant to improve the accuracy of payment rates," Pear wrote. "But doctors, hospitals and patient groups say the effects could be devastating."
2004 Medicare Reform Backfire
- A Gallup poll found public disapproval of Bush's "handling of health care" increased 13% since 2003, and the January 19-February 1, 2004 "survey found 57 percent of the 1,001 Americans surveyed" disapproved of "Bush's health care policies, compared to 35 percent of voters who approve[d]."
- Democrats said Bush's Medicare plan didn't "do enough to defray prescription expenses for retirees" and "Republican critics" called the "drug benefit an unprincipled bid to buy votes in November." 
- Critics accused the Bush administration "of lying about the bill's cost to taxpayers. While pushing the Medicare bill on Capitol Hill, the White House estimated the new drug benefit would cost $400 billion over the next 10 years. But when Mr. Bush released his fiscal 2005 budget earlier [in February 2004], that cost was estimated at $534 billion."
"Where the White House saw hope for a political edge, many in the GOP saw a shameless sellout," the Washington Times reported.
2003 "Means Test"
The matter of a "means test" for Medicare benefits was a "hot issue" in 2003. According to the October 16, 2003 issue of the Washington Post:
- "According to several sources familiar with the negotiations, the core group of lawmakers trying to resolve separate House and Senate versions of the Medicare legislation has reached consensus on the basic strategy of charging higher insurance premiums to recipients with comparatively high incomes.
- "The negotiators, however, have not worked out crucial questions such as how many of Medicare's 40 million recipients would pay such a surcharge, when it would begin and how the government would administer it. 'The details are still very much up in the air,' said one source, although negotiators have reached a 'general consensus.'"
- Amy Goldstein, Medicare Bill Would Enrich Companies. $125 Billion More for Employers, Health Firms, Washington Post, November 24, 2003.
- Bad Medicine, SaltLakeTribune, November 24, 2003.
- Edward Walsh and Bill Brubaker, Drug Benefit's Impact Detailed. Many Will Face Big Out-of-Pocket Costs, Washington Post, November 26, 2003.
- David Von Drehle, For Democrats, A Wake-Up Call, Washington Post, November 26, 2003.
- Amy Goldstein and Helen Dewar, Medicare Bill Headed to Bush. Senate Vote Clears Way for Drug Benefit, Competition, Washington Post, November 26, 2003. How Senators Voted.
- Mike Allen, Bush Celebrates Medicare Victory. Next on Agenda: Malpractice-Suit Curbs, Washington Post, November 26, 2003.
- Edward Walsh and Bill Brubaker, Drug Benefit's Impact Detailed, Washington Post, November 26, 2003: "The vast majority of Medicare recipients should receive some benefits from the program when it takes effect in 2006. But the size of the benefits will vary depending on each person's annual spending for prescription drugs, and in many cases will involve substantial out-of-pocket expenses. ... For those joining the voluntary plan, prescription drug coverage will not be provided by the government but by private companies."
- Andrea Stone, Benefits start in '06, but help available sooner, USAToday, November 26, 2003.
- Andrea Stone, Bill falls short of coverage members of Congress get, USAToday, November 26, 2003.
- Jim Drinkard, White House may be receptive to importing drugs, USAToday, November 26, 2003.
- William M. Welch and Julie Appleby, Medicare bill may benefit seniors, but not taxpayers, USAToday, November 26, 2003.
- Mark Sherman, Analysts: Medicare Drug Costs Will Rise, AP, November 26, 2003.
- Mark Sherman, Prescription Drug Cards Coming in April, AP, November 27, 2003.
- Robert Novak, GOP pulled no punches in struggle for Medicare bill, Chicago Sun Times, November 27, 2003.
- Gardiner Harris, States Try to Limit Drugs in Medicaid, but Makers Resist, New York Times, December 18, 2003.
- Michael Johns, "The Great Society Meets the 21st Century," Orthopedic Technology Review, January 2004.
- Tony Pugh, "Medicare Analyst Confirms Muzzling," Philadelphia Inquirer, March 13, 2004.
- Douglas Waller, "The Medicare Mess. The Medicare bill backfires on the GOP," Time, March 29, 2004 (Edition).
- Kelly McCormack, "Fred & Ethel, drug-plan shills", The Hill, December 8, 2005.
- Andrew Taylor, "Cheney Breaks Senate Tie on Spending Cuts," Associated Press (Philadelphia Journal Register), December 21, 2005.
- Robert Pear, "Bush Administration Plans Medicare Changes," New York Times, July 17, 2006.
- Susan Levine, "Bills Soar As Many Hit Gap in Drug Plan. Medicare Provision Jolts Some Seniors," Washington Post, July 30, 2006.
- Paul Krugman, "Demons and Demonization," the New York Times, March 17, 2010.
- Ryan Chuttum, "Reuters is Excellent in Digging Up Insurer's Tactics," Columbia Journalism Review, March 17, 2010
- Nancy Delew, "Medicare: 35 Years of Service," Health Care Financing Review, Vol 22, Issue 1, September 2000.
- Kaiser Family Foundation, "Medicare at a Glance," organizational document, November 2012, accessed February 2013.
- U.S. Census Bureau, "Current Population Survey, 2012 Annual Social and Economic Supplement," organizational document, 2012, accessed February 2013.
- Centers for Medicare and Medicaid Services, "Chronic Conditions Among Medicare Beneficiaries," organizational document, 2011, accessed February 2013.
- Centers for Medicare & Medicaid Services, Eye Exams, government website, accessed February 2013.
- John Holahan and Stacey McMorrow, "Medicare and Medicaid Spending Trends and the Deficit Debate," New England Journal of Medicine, August 2, 2012.
- Joyce Manchester and Julie Topoleski, "The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan," Congressional Budget Office, March 2012.
- Paul N. Van de Water, Center on Budget and Policy Priorities, "Medicare Is Not 'Bankrupt'; Health Reform Has Improved Program’s Financing," organizational publication, April 24, 2012.
- Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, "2012 Annual Report," U.S. Securities and Exchange Commission (SEC) document, April 23, 2012.
- Maura Calsyn and Lindsay Rosenthal, Center for American Progress, "Raising the Medicare Eligibility Age Would Harm Seniors and Increase Health Care Spending," organizational publication, December 10, 2012.
- Ellen O’Brien et al., American Association of Retired Persons, "Older Americans in Poverty: A Snapshot," organizational publication, April 2010.
- Robert Pear, Bush Administration Plans Medicare Changes, New York Times, July 17, 2006.
- Ralph Z. Hallow, Medicare reform backfires on Bush, Washington Times, February 17, 2004.
- Amy Goldstein, 'Means Test' Deal Near On Medicare; Wealthy Seniors Would Be Charged More Under Plan (sub. req'd.), Washington Post, October 16, 2003.