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Medicare’s future is bright

Written by Diane Archer
In the second part of his presentation to the National Academy on Social Insurance, Medicare and Medicaid: The Next 50 Years, Princeton health economist Uwe Reinhart sees great promise in Medicare’s future.  He makes mincemeat of all the “serious people” who worry about Medicare’s sustainability because the U.S. population is aging.Today, people over 65 represent 14.7 percent of the population and in 35 years, 2050, that percentage will jump to 20.3 percent. If real inflation adjusted GDP per capita grows at 1.5 percent annually, Medicare spending will account for 8.7 percent of the nation’s gross domestic product (GDP) in 2050, up from 3.6 percent in 2005.  The “serious people” suggest that this is a serious problem. However, few of them publicly acknowledge that just as Medicare spending will grow, GDP will grow. In 2005, per capita GDP was $40,000; by 2050, per capita GDP will grow to $73,000.

So, even with Medicare spending at 8.7 percent of GDP, in 2050, there will be a lot of additional money to spend to provide a financially secure, healthful retirement for Americans. We will have $66,600 of non-Medicare GDP per capita, up from $38,600.  In short, Reinhardt makes the case that we have the resources and the reason to strengthen benefits for people with Medicare if we want true retirement security to be part of the social contract.

Not only that, there’s room for us to raise taxes without impeding economic growth.  In 2012, we had lower taxes as a percent of GDP than every country in the Organisation for Economic Co-operation and Development (OECD) except Mexico, at 24.3 percent.  Denmark’s is 48 percent and Canada’s is 30.7 percent.  And, the US has had lower economic growth than many other OECD countries with higher taxes.

Most cynically, Reinhardt suggests that the moneyed interests may be our best allies in ensuring that Medicare remains strong – as long as they get a slice of the larger economic pie.  After all, Congress passed both Medicare and the Affordable Care Act after paying off powerful industries. Who knows – that just might get the serious people to change their tune.

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3 Comments

  • No way have the monied interests ever been our “allies”. And why would they start now! The loss of income since the 70’s is in direct proportion to the increase in income of the very wealthy (see Robert Reich).The Congress only does what its wealthiest contributors tell them to. They no longer represent those of us, the majority, who cannot give them more money than the wealthy do, to vote for things that benefit us, the people. The money set aside to help the people, always goes to the business people first, who then decide how much they will “trickle down” to us. And it is never the full amount that was set aside to benefit the people. The most recent budget submitted makes huge cuts to Medicare-Medicaid, and gives huge tax breaks AGAIN to the wealthy. They have already cut our medical benefits, salaries, pensions, hire and fire at will, and are currently removing people from work 50 and up who want to work. They also do NOT hire anybody 50 and up. Then they cut our medical care as we are no longer allowed to work. There are always exceptions to these statements, but they are more often true than not. And since when does anybody believe they will suddenly and unexpectedly do a 180 to help the people they have been steadily cutting out since the 70’s…! This is naive’ and unfair to put these ideas out as truth. Talk to the group who is losing…..again! After being steadily cut out of the earning society since the 70’s most obviously, it looks more like an attempt to move the people out who need Medicare-Medicaid, than to do anything for them. Business controls Congress. The point of business is to make profit. You do not support workers when there are so many others you can get cheap, because the economics of the country have made so many income-less, and unable to keep their homes, raise their families or pay for medical care. Do not pretend that you can keep yourself healthy forever. We all age, if we do not die first, and will need medical care. Why should they support people who cannot earn money for their company anymore. It is more practical and you are more able to keep more money for yourself, if you get rid of them and cause the country to forget them as soon as possible, so you will not have to deal with them. And you can lie to the next working generation coming up, until you do the same to them when they hit their 50’s, and maybe you can get rid of them younger even by that time. They say now you should expect to change jobs 5 or 6x in your life, and should not expect to stay in one job beyond 5 or 6 years.

  • How can this possibly be true when 3/4 of the workforce makes less then they did in 2002 and all I read from political websites is that republicans are trying to gut any and all entitlements for workers the poor and seniors , and put anything that survives into privatization. I don’t believe this article.

  • All Congress would have to do is remove the “cap” and make the Millionaires & Billionaires pay their fair share. If they did that not only would Medicare & Social Security be sustainable for a hundred years, we could expand on the benefits. Senator Sanders has sponsored a Bill to do just that.

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