Medicare to approach 6% of GDP by 2040 — contrary to media reports, reform more urgent than ever

Medicare is projected to become nearly 6% of GDP by 2040 and less than 1/3 of that is financed by existing sources of income (payroll taxes and premiums) — the rest is going to come from deficits and transfers from general tax revenues.     This good news was recently released this month by the Medicare Trustees and is based on some rosy assumptions — namely the SGR actually happens (25% cut in doctor fees) — which has been postponed by Congress for the last 10 years.   For those of you who want to be educated about the finances of this critical entitlement and why/how it is driving our Federal and State budgets into further deficits, I encourage you to read this quick analysis by one of the public trustees.

My take is we need to reform Medicare — how it is financed and how it operates — if we hope to have any chance of getting government spending under control.    Yes, we need to provide health coverage to our citizens.    But it makes no sense to do so in a way that clearly does not work and is unsustainable.     As I have written in the past — we need to focus on ‘value’ in our health delivery system (better outcomes for less inputs) and not just access (insurance coverage and benefits).    IMHO, this means the consumer/citizen needs to be more accountable and have more choices.      The political dialog needs to start with citizens having a better understanding of our programs and what they cost.     You are not going to get that from the mainstream media — I hope you all read the analysis.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s