Medicare Won't Go Broke, but It May Become Extinct
The cost of health care has been a heated discussion for many years; and with this being an election year, politicians are fanning the fire. More recently, folks both young and old are voicing their concerns about the future of Medicare.
“I just assume Medicare won’t be there for me at all,” Christine Pallensen, a 26-year-old business consultant in Fort Lauderdale, told Associated Press reporter Bill Barrow.
But a law professor at the University of Illinois says, quoting Franklin Roosevelt, “… the only thing we have to fear is fear itself.”
Simply because of its size, cost, and complexity, Medicare is a natural target and is shrouded in myths and misconceptions, said Richard L. Kaplan, a retirement benefits expert.
In a recently published paper, Kaplan dispels several myths, including the one about Medicare going bankrupt. According to Kaplan, reports of Medicare eventually succumbing to debt have been greatly exaggerated.
“Medicare Parts B and D are financed by premiums paid by current year enrollees and general tax revenues,” Kaplan reasons. “These funds are generated in the current fiscal year.”
In that case, with the baby boomer generation now entering retirement age, Medicare’s Parts B and D cups should runneth over in the coming years.
Medicare Part A, however, may not fair so well since it is vulnerable to economic instability, Kaplan said. Medicare Part A collects payroll taxes paid by current workers and funnels those taxes to a “trust fund” that pays for its expenditures.
Another myth is that Medicare is politically untouchable, Kaplan said. “In fact,” he said, “half of the financing for the Affordable Care Act comes from cuts to Medicare’s budget.” Providers have seen most of those cuts in their wallets.
More likely, Kaplan said, Medicare will meet its demise if providers stop accepting patients covered by Medicare.
“If health care providers decide that they are not going to take any new Medicare patients, there may be serious access issues,” he said. “We’ve seen that happen already with Medicaid, and it might soon happen with Medicare.”