- - Wednesday, July 29, 2015

On July 30, 1965, President Lyndon B. Johnson signed a bill into law that created the federal Medicare and Medicaid programs. While both started with good intent, the past 50 years have left the American public with two massive entitlements that are in dire need of reform.

Let’s start out with the obvious. Taxpayers cannot continue to pay for the growth of these programs — especially when we consider taxpayers are already $18 trillion in debt. 

In fiscal year 2014 alone, Medicare and Medicaid accounted for about one-quarter of the federal budget. That year, the feds budgeted to spend about $3.5 billion total. Unfortunately, our friends in Washington failed to collect enough revenue to cover that amount. So, we did what we have become so good at as a country: we put the rest on the credit card.

The federal government borrowed nearly $500 billion last year to make up the budget hole. To give you an idea of how much that actually is, the entire budget for Medicare was $505 billion.

This points to a pretty easy answer on eliminating our deficit, simply eliminate Medicare — clearly not a real answer.

Since that is not a viable option, maybe it is time to have a serious conversation about reform. If we do nothing, the Medicare Part A trust fund – which covers doctor visits, hospital stays, surgeries and other services – will run out by 2030, a short 15 years away.

That means anyone under the age of 50 today would see a steep decline in available health care benefits when they retire. Worst-case scenario, this group of Americans would get nothing. 

How about Medicaid? Have the last 50 years been a success? 

If you determine success by the amount of people on government assistance, then yes, it has been a success. I prefer to determine success by how many people we can get off of government assistance, though. In that case, Medicaid is a broken system.

In 1966, the year after the program started, Medicaid covered about 4 million people. Today, it covers about 70 million people at a cost of nearly $500 billion a year.

If the program actually improved the health of those on it, maybe I could see some small benefits. But a widely cited study about Oregon’s Medicaid program shows that health outcomes for people on Medicaid were about the same as individuals without insurance.

If taxpayers are going to pay for a program that 70 million people use, maybe our government should ensure it actually works. 

With those kinds of statistics, I say no thank you to the folks that favor the costly expansion of the program.

Instead, Medicaid needs to be reformed back to its original intent. 

It should be there to provide health coverage to impoverished Americans who are trying to get back on their feet or to individuals that are disabled and cannot provide for themselves. By putting the focus on the ones who truly need it, the program could once again help people, instead of trapping them in a government bureaucracy. 

When it comes to Medicare, cost-saving measures are also needed. With a generation of baby boomers retiring, Medicare spending is only going to increase. In the next decade, the Congressional Budget Office projects Medicare spending will jump from $505 billion a year to $866 billion a year – an increase of more than 70 percent. 

Nothing should be off the table when it comes to Medicare reforms. Retirees should be allowed to use private insurance if they want. Some type of premium support plan could bring more competition into the program – likely bringing done the cost of health care. And, when it comes to the retirement age, raising it could be an option. 

Like I said, nothing should be off the table. However, reforms need to make sure people in retirement or near retirement are not impacted. The government made a promise to taxpayers, and it should be held to it. 

Changes are needed before future generations begin to retire, though. Without any, today’s youth may not have Medicare to rely on when they actually need it. For taxpayers, the 50th anniversary of Medicare and Medicaid is not exactly something to celebrate. But, it does serve as a reminder that reforms are needed.

And they are needed sooner rather than later.

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