Dec. 3 (Bloomberg) — The Medicare program is expected to spend about $550 billion this year. That’s 936 times more than the $587.5 million Powerball lottery last week.
By 2021, spending on Medicare is projected to top $1 trillion, enough money to buy every person 65 and older that year, all 56 million of them, 26 shares of Google stock at their current share price of $685.
My colleague Christopher Flavelle took a look at Medicare’s costs and found the possible solutions none too appetizing.
The cost of Medicare is projected to grow faster than the economy for the next 75 years. The payroll tax for Medicare, which for a long time covered a majority of its costs, now covers just one-third.
The options to address this gap without increasing the deficit are easy to identify, but they require choices that have consequences. Flavelle narrows the choices to four: borrowing, cutting spending elsewhere, increasing revenue, or reducing cost growth.
Every option has pros and cons. The government could borrow more to cover its spending, but that only adds to the deficit. Cutting spending elsewhere means two things: the political will to cut Medicare doesn’t exist and other programs face larger reductions.
Increasing revenue, by charging beneficiaries more for medical care or raising taxes, is fiscally viable but politically untenable. And reducing cost growth by cutting payments to providers is feasible but risks harming access and quality of care.
With one in eight Americans eligible for Medicare, it’s a huge market for health-care businesses. Congress and the president need to make sure their prescription doesn’t kill the patient or the market incentives to care for them.
To learn more about Bloomberg Government, visit bgov.com.