In 2016, Medicare spending constituted 3.64 percent of GDP. That is a six fold increase since 1967, the first year after the Medicare program began operation.
My analysis shows that there are combinations of these three adjustments that can reduce Medicare expenditure growth to a rate consistent with the long-term historical growth rate of GDP. If future GDP growth continues to approximate recent history, Medicare would then remain stable as a percentage of the economy.
Third, beyond the sheer market power, government has prohibited physicians and hospitals from treating both patients under Medicare and eligible senior patients outside of Medicare.
Baseline data are computed from Medicare and Medicaid Board of Trustees, 2017 Annual Report of the Boards of Trustees, the downloaded file "2017 Expanded and Supplementary Tables and Figures.zip," and Center for Medicare and Medicaid Services, "CMS Statistics Reference Booklet," 2016.
If policymakers wish to retain the structure of the current Medicare program, changes similar to those identified here are required to avoid the negative consequences of the unsustainable increases in Medicare expenditures.
The Medicare Board of Trustees estimates that an increase in the Medicare payroll tax of 0.64 percentage points to 3.54 percent would avoid depleting the funding balance projected for Part A in 2029.32 But Part A payroll taxes and funding balances are only a small part of total Medicare, so even if this payroll tax were passed, additional tax increases averaging between 15.41 percent and 34.06 percent would be needed to cover all of the spending increases.
Disability beneficiaries are also entitled to free Medicare, so a portion of the Medicare taxes also go to pay for Medicare for the disabled.
https://www.cato.org/publications/policy-analysis/unplugging-third-rail-choices-affordable-medicare
My analysis shows that there are combinations of these three adjustments that can reduce Medicare expenditure growth to a rate consistent with the long-term historical growth rate of GDP. If future GDP growth continues to approximate recent history, Medicare would then remain stable as a percentage of the economy.
Third, beyond the sheer market power, government has prohibited physicians and hospitals from treating both patients under Medicare and eligible senior patients outside of Medicare.
Baseline data are computed from Medicare and Medicaid Board of Trustees, 2017 Annual Report of the Boards of Trustees, the downloaded file "2017 Expanded and Supplementary Tables and Figures.zip," and Center for Medicare and Medicaid Services, "CMS Statistics Reference Booklet," 2016.
If policymakers wish to retain the structure of the current Medicare program, changes similar to those identified here are required to avoid the negative consequences of the unsustainable increases in Medicare expenditures.
The Medicare Board of Trustees estimates that an increase in the Medicare payroll tax of 0.64 percentage points to 3.54 percent would avoid depleting the funding balance projected for Part A in 2029.32 But Part A payroll taxes and funding balances are only a small part of total Medicare, so even if this payroll tax were passed, additional tax increases averaging between 15.41 percent and 34.06 percent would be needed to cover all of the spending increases.
Disability beneficiaries are also entitled to free Medicare, so a portion of the Medicare taxes also go to pay for Medicare for the disabled.
https://www.cato.org/publications/policy-analysis/unplugging-third-rail-choices-affordable-medicare
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