Senators make public Medicare Reform Bill

Republican Senators, Tom Coburn and Richard Burr disclosed a bold Medicare Insurance reform proposal on Thursday, Feb 17, that would speed up a changeover to private health insurance, increase the eligibility age for oncoming seniors, and endorse higher premiums for middle- to upper-class retirees. The two Senators held that aim is to arouse a mature conversation among fellow lawmakers and the public about the need to change an entitlement system that may provoke serious fiscal consequence in its current form.

Medicare Insurance funds healthcare for 49 million seniors and disabled people, but the alleged “trust fund” for inpatient care is expected to become bankrupt by 2025. This implies that payroll tax revenues will be inadequate to cover the projected benefits.

Medicare Part A is funded primarily from payroll taxes while Medicare Part B is financed by a mix of beneficiary premium dollars and general tax revenue dollars: 25% from premiums and 75% from general tax revenues. Thus overall, 87% of total Medicare revenues for Part A + Part B comes from current taxpayers and only 13% come from Medicare beneficiaries’ premiums and tax payments.

The Coburn-Burr plan has been assessed by the Congressional Budget Office, and the Senators have predicted savings of between $200 billion and $500 billion in the next 10 years. The Medicare overhaul bill, called the Seniors’ Choice Act, would increase the eligibility age to 67 for those born after 1959 and increase Medicare premiums by three percent each year until a nine-percent adjustment is achieved in 2016.

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