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Consequences of cutting Medicare

By Jennie L. Phipps · Bankrate.com
Sunday, August 28, 2011
Posted: 7 am ET

My neighbor had his hip replaced. Medicare paid for everything -- nearly $50,000 worth of surgery, hospitalization, medicine and rehabilitation.

It was life changing for Jim, who had gotten to the point where he could barely walk. It wasn't long ago that a guy like him living in retirement who had worn out his body driving and unloading a truck would suffer, maybe use a wheelchair, and probably die young.

Today, with medical know-how and Medicare to pay for it, Jim and others like him with modest resources can afford the best. And their retirement planning can include the prospect of years of active and pleasurable life.

That wasn't always true. According to data from the Congressional Budget Office and the U.S. Census Bureau, in 1965, when Medicare was created, the poverty rate among those older than 65 was 30 percent; today it is 7.5 percent. Part of this newfound wealth is almost certainly the availability of reasonably priced health care.

Some analysts from the Kaiser Family Foundation argue that even doing something that seems relatively painless -- like raising the age of Medicare eligibility by two years from 65 to 67 -- actually has costly consequences.

The foundation says:

  • State Medicaid costs would rise because those who lost Medicare coverage (those with the lowest incomes) would obtain coverage through Medicaid instead.
  • Employer costs would rise as more 65- and 66-year-olds whose employers offered coverage to their retirees received primary coverage through their employer rather than Medicare.
  • All Medicare beneficiaries would pay higher premiums because the removal of 65- and 66-year-olds, who are typically healthier than the overall Medicare population, would in effect subsidize older recipients.

With Medicare high on the list of things the new Congressional "super committee,"  is considering cutting, could we be forced to go backward? Let's hope not.

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2 Comments
TG. M
August 30, 2011 at 11:37 am

Obamacare will be the end of Medicare. In Ga. a person can only qualify for Medicaid if they already have Medicare or SSI. The cost of medical treatment and medicine continues to skyrocket. Also it is not "just the poor" who get Medicare benefits.
It's time to take off the rose coloured glasses.

michael p kerwin
August 29, 2011 at 11:21 am

The Kaiser Family Foundation survey has a number of items that are true. The Super committee does have items that they could cut on their plate. Will they? I'm not sure. One thing I do know is Obamacare will totally gut the Medicare program in the coming years with a number of the subprograms under it being folded into Medicaid. CMS will be a smaller department. It's as if we have a full blown case of amnesia to this actual future event. The challenge by the media is that one doesn't want to ruin a good story even though they are fully aware of the truth exactly what will happen.