Program needs urgent changes now, secretary says Health & Human Services Secretary Michael Leavitt has issued a strong warning about Medicare: It's heading toward disaster, and time is running out to fix it. If the government fails to act, the system will be broke in 11 years, failing in its objective to pay for healthcare for elderly and disabled people. "This is serious business involving trillions of dollars and the lives of hundreds of millions of people," Leavitt says in an April 29 statement, entitled "Drifting To Disaster," on the HHS Web site
http://www.hhs.gov/news/speech/2008/sp20080429a.html. Disaster is not inevitable, he says, but the country must act now, and it must fix Medicare's core problem: Healthcare costs are rising higher than other costs in the economy, and all the evidence shows that the trend will continue. Another major problem is that the U.S. population is aging, which leads to higher medical expenses. "Today, 12 percent of the population is 65 or older. By 2030, nearly 20 percent of us will be seniors. There is nothing we can do to change that," he says. Leavitt says he was motivated to make a serious statement after reviewing a report from the Medicare Trust Fund, which he is a member of. The report was based on government actuaries' information on the condition of the Social Security and Medicare Trust Funds. Tough choices: Leavitt predicts a gloomy future unless the government repairs the program's major flaw: Younger working people must pay for seniors' healthcare, but the number of workers per senior is falling fast. "Higher and higher costs are being borne by fewer and fewer people. Sooner or later, this formula implodes," he says. Congress will be forced to act to keep the system solvent, and lawmakers will have only three choices: • raising taxes; • cutting benefits to seniors; or • imposing reduced payment rates on providers. Leavitt warned that these options will lead to intergenerational conflict. In the next 20 years, the number of working people per Medicare beneficiary will drop from 4 to 2.5, and younger workers will face off against seniors in the dispute over taxes and Medicare benefits. Both sides will have valid arguments, Leavitt says -- workers can claim that their own expenses, including healthcare, are too high and that they can't afford higher taxes, and seniors can claim that they are legally entitled to benefits from a system that they supported while they were working. Examples highlight U.S. trouble: Comparing the United States' healthcare dilemma to problems faced by other countries, Leavitt lauded the method used in Singapore, where the government requires citizens to save money and has a healthcare system that uses only 4 percent of its [...]
