Medicare will face insolvency by the turn of the century if efforts aren't made immediately to control costs, a representative of the conservative Heritage Foundation said Monday.
Robert Moffit, a former Reagan administration staffer, said hard choices face Congress and the president in the next couple of years if a solution is to be found to control ballooning health-care costs associated with Medicare, a national health insurance plan for the elderly.He spoke at the 10th annual Seniors Conference at Little America Hotel.
Moffit said some of Medicare's problems stem from a health-care system that works too well.
"Medicare's problems have little to do with the health-care delivery system," he said.
In 1900, the average male life expectancy was just 47 years, and many people died from infections associated with various ailments. Then came the invention of penicillin and other antibiotics. Even since Medicare began in 1965, the health and life expectancy of senior citizens have increased dramatically. Research into the genetic causes of certain illnesses promises to push the life expectancy envelope even further.
Better medical treatments and healthier seniors citizens have led to a Medicare system that is already overburdened. Add to that a logjam of Baby Boomers born after World War II and progressing toward retirement, and the math of paying for Medicare after 2000 just doesn't add up, Moffit said.
"For every $1 elderly Americans contribute to the system, working families contribute $5 just to keep it going," he said.
Worse yet, tax increases on the order of $5,000 per household will be needed to keep Medicare afloat during the coming years. Even larger tax increases will be necessary as the ranks of senior citizens swell with the retiring of the Baby Boom generation.
Other issues hampering Medicare include a ponderous bureaucracy that acts like an "old Soviet factory management team" and causes some doctors to spend 25 percent of their time just filling out government paperwork. Moffit said the system's pricing policies are also inflexible, meaning it allows charges of too much for some things and not enough for others.
Some senior citizens in the audience disagreed with Moffit's assessment of Medicare's problems. They complained of Medicare-reform crusaders trying to pit young taxpayers against old beneficiaries in schemes to reform the system. Some said the real problem with Medicare is doctors who overcharge.
Moffit agreed that overbilling and other types of fraud amount for as much as 10 percent of all claims submitted to Medicare. But, he added, the federal government has done much to crack down on such abuses in recent years. Cracking down on abuse won't be enough to repair a system that is defective at its core, he warned.
The Heritage Foundation supports developing a Medicare system grounded in the private sector and emphasizing consumer choice and competition.