Transforming Medicare into True Social Insurance

The issue of Medicare Plans reform is devastating as Medicare confronts enormous structural deficits. If successful solutions to control its costs are not executed, seniors will face automatic benefit diminution when the Medicare Part A Trust Fund becomes bankrupt in 2024, or working Americans will be required to pay much higher taxes to keep the program working.a

A reform that moves Medicare to a “premium support” model which offers government health care support for seniors with the help of a defined contribution is the right one. Such a reform would generate a competitive marketplace in which seniors can select from among competing plans offering Medicare Plan benefits. Such a reform will ensure better value for seniors by cutting down the cost of health care delivery without forgoing its quality.

Funding Medicare through premium support is essential, but inadequate. Congress needs to re-target limited financial resources to those who require them most. This implies continuing and increasing income adjustment also termed as means testing, which would lessen the amount of federal support that wealthier beneficiaries get for their health care benefits, based on their retirement income. In the face of dangerous deficits, it is no longer practical to bring about a highly unreasonable universal entitlement program.

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