Why Medicare Expansion Threatens the Bush Tax Cuts and UnderminesFundamental Tax Reform heritage.org - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from heritage.org Daily Mail and Mail on Sunday newspapers.
Medicare is based on the cost of seniors' health care being borneprimarily by younger workers. The demographic reality is there arediminishing numbers of workers per senior. Promises to today's andfuture beneficiaries must be kept, but not at the expense of futuregenerations. Building incentives for high quality, efficient caredirectly into the Medicare payment structure and using the power ofpersonal choice and competition are key reform elements.
Medicare's increasingly dangerous financial plight leaves Congress with only two options if the program is to continue providing health care to seniors: either restructure and reform the pro- grain or significantly increase payroll taxes on America's businesses and working families. While payroll taxes technically are shared between employers and employees, in reality most taxes on busi- ness are shifted to workers in the form of reduced wages or compensation-in some cases, even job loss. Thus, any new payroll tax to shore up the financially failing Medicare system will be another tax on America's working families. Medicare's seven-member Board of Trustees, which includes President Clinton's Secretaries of Health and Human Services, Treasury, and Labor, has determined that the Medicare Hospitalization (HI, or Part A) Trust Fund, which finances hospital services to the nation's elderly, will be insolvent in the year 2002.
Medicare is financially unsustainable in its current form. TheMedicare Trustees' 2008 estimate of the program's total excess costs is $85.6 trillion. The Trustees acknowledge an important,flawed assumption used in developing their estimate of excesscosts. If corrected, Medicare's excess costs would increase,underscoring the need to reform Medicare quickly and substantially.