With the Obama law on the books, current Medicare projections reflect most of these changes. The Medicare actuaries and the Congressional Budget Office both forecast that costs for each beneficiary will grow at close to the target rate already. But the program’s overall costs are still expected to rise precipitously in the coming years. The Medicare trust fund, which pays for most of the program’s hospital care, is expected to go broke in 2024.
The Romney plan isn’t designed to outperform that growth rate. In fact, given statements that Romney and Ryan have offered this week, it’s likely to be worse. Because they would repeal the health reform law, including the cost-saving measures, implementing their plan would mean Medicare would grow by $716 billion more over the next 10 years. Their premium-support system, with its growth cap, wouldn’t kick in until then and wouldn’t affect every senior in the program for decades.
“You’ve got to start with a good diagnosis of the problem,” said John Holahan, director of the Health Policy Center at the Urban Institute, who helped develop the Massachusetts health reform law. Holahan was a coauthor of a recent paper in the New England Journal of Medicine, arguing that current reforms are already achieving the stated goals of voucherization.
But the kinds of reforms that would be needed to hold spending steady for the whole Medicare program would be dramatic and politically unpalatable. They could involve raising the eligibility age significantly, upping premiums for middle-income beneficiaries, or cutting back expensive benefits. The government could also raise Medicare taxes, as it has done repeatedly since the program launched in 1965. There is hope that health system changes, which could arrest the growth in health spending overall, could be part of the solution — but probably not the whole solution.
Regardless, the contours of this debate mean that Medicare reform will be with us for several more election cycles. Some analysts have referred to the aging of the baby boomers as the “pig in the python,” but with the boomers anticipated to live a long time, their costs will stay with us for decades.
“I don’t like the pig in the python; I like the telephone poll in the python,” said Rea Hederman Jr., a research fellow at the Heritage Foundation. “Because it isn’t like it drops off.”