With the fiscal cliff deadline approaching in the United States , one consequence of which will be cuts to Medicare. Â Medicare costs too much. It is a huge drain on the federal budget. That budget is at totally unsustainable levels of indebtedness. Medicare buys health insurance for 50 million Americans aged 65 and over. Most health insurance is called on, to ease the final year of elderly American lives.
The deadline for the termed ‘fiscal cliff’ in the United States is midnight December 31, 2012. Â After which, previous tax cuts including both last year’s temporary tax cuts as well as those from the Bush Tax Cuts (2001-3) will come to an end. Â What’s more is that both taxes related to president Obama’s health care law will start along with spending cuts from the Budget Control Act of 2011. Â Current estimates suggest that the United States national debt equates to just over $50,000 per American citizen (link)
The Fiscal Cliff and Medicare Cuts?
The federal government controls the budget deficit and not doing anything about it, is not an option. One of the big savings they could make is to rise the qualifying age for medicare from 65 to 67 years. This is definitely the preferred action from the conservative right part of the political spectrum. But how would the raising of the medicare starting-age limit come about?
The most likely implementation method is a gradual rising of the age limit, twice a year, over a ten year period. There is a precedent for this since the federal administration of the â€˜80â€™s did just this to the social security age limit. Mitt Romney was the outstanding proponent of the action during the budget negotiations last year.
If nothing is done to trim back the medicare budget it is set to rise, from an incredible $600 billion every year. Some estimates from the independent Congressional Budget Office, or CBO, put Medicare at over a trillion dollars per year by 2021. By phasing in the raised eligibility criteria the savings could be as much as $113 billion in ten years. It is so significant because of the population bulge known as the â€˜baby boomâ€™, is about to hit Medicare.
Fiscal Cliff and Entitlements?
No wonder the politicians are looking closely at it and we can be sure something of the like will come about. A likely consequence of pushing back Medicare coverage is that many more Americans will work up until they become 70. Although the CBO do not estimate this as being a hugely significant addition to economic activity.
If and when Older Americans cannot get Medicare they will be able to purchase health insurance under the new healthcare act. This guarantees health cover, at reasonable prices, even for people with chronic health conditions. It just has to be bought from employers or insurers as young workers do now. The new law puts a ceiling on how much insurers can charge and prohibits surcharging for pre-existing illnesses.
Some senior citizens will have to pay more for health insurance than they would have done under Medicare simply because private health care costs more. The CBO analysts also estimate that around 5 in every 100 Americans would go without insurance. Taking the relatively young out of Medicare will leave a relatively older and thereby sicker population behind. This will raise the costs and the premiums for everyone still contributing to the fund.
Other ideas to cut the Medicare budget are to reduce payments to hospitals and other primary healthcare providers, vouchers for purchasing private health care, and differential pricing according to ability to pay.