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Understanding Medicare Finances: Myths and Realities Behind the Budget Crisis

This insightful analysis by Jim Luke, Professor of Economics at Lansing Community College, explores the ongoing misconceptions regarding Medicare, government budgets, and rising budget deficits. It debunks myths surrounding entitlement programs, particularly Medicare, Social Security, and Medicaid. The text addresses claims that Medicare is bankrupting the economy, discusses Medicare's funding structure, and explains the implications of raising the eligibility age. Through in-depth research, it illustrates that Medicare controls costs better than private insurance, highlighting the importance of preserving and funding this crucial program.

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Understanding Medicare Finances: Myths and Realities Behind the Budget Crisis

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  1. A Reality-Based Look at Medicare Finances and the Government Budget Jim LukeProfessor of EconomicsLansing Community CollegeNov. 13, 2013 http://econproph.com Busting the Medicare Myths

  2. What HaveYou Heard?

  3. “Entitlements like, socialsecuritymedicareandmedicaid are busting the budget.” “WE HAVE TO……DO SOMETHING SERIOUS!…CUT BENEFITS! ..PRIVATIZE! …VOUCHERS! …THROW GRANDMA FROM THE TRAIN! AND NOW!” “We are mortgaging our grandchildren’s future.” We are constantly told that:

  4. The hype and rhetoric here.

  5. Reality Check here.

  6. The U.S. budget deficit is rising and out of control.

  7. Budget deficit is shrinking.

  8. Deficit as % of GDP is OK.

  9. Budget deficit is shrinking, manageable, and no crisis exists.

  10. ACA cuts Medicare to fund “Obamacare”.

  11. ACA reduces projected increasesin Medicare spending. • End overpayments to Advantage cos. • Reduce pymts for uninsured losses • Reduce fraud • Does not “fund” “Obamacare” Source: Prospect.org

  12. Repealing ACA will increase & worsen Medicare cost problems. Source: Prospect.org and others

  13. Medicare will be bankrupt and we must act NOW.

  14. Part B (SMI) and D (Rx) are funded annually from general fund.“Bankruptcy” is a meaningless term. Can Pentagon go bankrupt?

  15. Part A (HI) could become “insolvent” but not “bankrupt”. • Part A (HI) has • trust fund • dedicated payroll tax. • General fund taxes are off-limits • If payroll tax is too little, then bfts reduced.

  16. HI (Part A) Is As Healthy As Ever.

  17. Raising the eligibility age will save Medicare.

  18. Raising Eligibility Age is an Incredibly Bad Idea • Raise age from 65 to 67: • Save $3.7b / year (Fed Gov) • Cost $11.4b / year (seniors, states, employers, and Medicaid) • http://theincidentaleconomist.com/wordpress/raising-the-medicare-eligibility-age-is-now-a-really-bad-idea/ • http://theincidentaleconomist.com/wordpress/monkeying-with-the-medicare-eligibility-age/

  19. Boomers are a burden we can’t afford.

  20. Medicare costs are growingout of control.

  21. Growth in Medicare $/beneficiary has slowed dramatically.

  22. Private insurance & competition is more efficient than government-run Medicare.

  23. Private insurance is increasingly less efficient than Medicare

  24. Medicare & Medicaid Control Prices Better Than Private

  25. Medicare controls costs better. • For common benefits, Medicare spending rose by an average of 4.3 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.5 percent per year. • Karen Ignagni, head of America’s Health Insurance Plans (AHIP), the insurance industry’s trade association, has admitted that private plans cannot bargain down provider costs and has asked Washington to intervene. Source: healthaffairs.org and others

  26. Private Health Insurance Admin Costs are 4-6x higher than Medicare

  27. U.S. Healthcare costs are risingbut at a slowing rate.

  28. US: $7,538 /person/year 2.5 x OECD average Higher prices Higher usage per person We spend more than others…

  29. But we get less.

  30. U.S. has a Healthcare System problem. Medicare is part of the solution.is will be bankrupt.

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