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Medicare reform remains divisive issue for U.S.

As I See It

What does Medicare reform mean? It depends on who’s speaking.

Part of the problem with having meaningful Medicare reform is agreeing on what is to be accomplished by changing the system. Reforming Medicare and Social Security is likely the most divisive public policy issue in America today.

If you ask current Medicare beneficiaries what reform means they are likely to say better benefits and lower cost. More specifically, providing Medicare beneficiaries with an affordable drug benefit rates at the top of the list.

If you ask health care providers their definition of Medicare reform they are likely to say more government dollars and less red tape. The health care industry is being slowly strangled by increasing bureaucratic regulation and rapidly escalating costs of operation.

Should one query lawmakers as to their concept of Medicare reform they would likely cite controlling health care inflation, dealing with an aging population in the midst of a slowing economy, and resolving conflicting ideologies within the various political factions of the Congress.

Speaking of political factions within the Congress, there are two decidedly different philosophies of Medicare reform between the two major political parties. Democrats want to provide a drug benefit for Medicare beneficiaries first and reform the program later. Republicans want to provide a drug benefit as part of overall reform of the program.

Most seniors seem to be reconciled that providing a drug benefit will cost them more money. How much more money they might find acceptable is another question. A recent issue of the AARP Bulletin features a story on the fate of Medicare by Patricia Barry. She reports that several focus groups have surveyed seniors about their expectations of what a Medicare drug benefit might cost and found that $25 a month was considered high and $50 a month intolerable. No proposal advanced by Congress offers a drug benefit premium below $50 a month.

Different groups with different agendas plus the sluggish economy are bogging the reform process to a standstill. Without doubt the issue is complex and cannot be resolved to everyone’s satisfaction. There is one more group whose views need to be considered — the taxpayers.

Who is going to foot the bill for expanding Medicare benefits? It is highly unlikely, to the point of absurdity, to believe that the premiums collected from Medicare beneficiaries will cover the cost of their medication. That leaves two groups to shoulder the burden — the drug companies and the taxpayers.

There was a lot of arrow flinging during last year’s presidential election regarding the profitability of drug companies. Al Gore targeted the drug companies as villains and the bane of humanity. Regardless of whether the drug companies’ profits are or are not excessive, it is unrealistic to assume that they will shoulder the entire load. When there’s heavy lifting to be done the taxpayer is always pushed up to the plate.

We need to be very careful about how we reform both Social Security and Medicare. By even a casual review of our nation’s demographics it is apparent that there will be fewer and fewer workers paying taxes when the Baby Boomers arrive at retirement age. At some point the generosity of the current generation in providing for itself could become unacceptably onerous to the next.

As the ratio of workers to retirees drops lower and lower, the per capita cost of funding federal programs will get higher and higher. At some point, the working citizenry will say enough is enough. We love Mom and Dad, but we are not willing to sacrifice half of our income to provide so generously for them. They should have done more to provide for themselves while they were working.

Will that be a valid complaint? Yes. Virtually all of us have had extra money that we chose to spend rather than save. We live at a far higher standard of living than Social Security will provide but refuse to discipline ourselves to provide for adequate supplemental retirement funds to maintain our lifestyle in retirement. Shame, shame.

With the Baby Boom generation aging every day, those of us who are part of that generation had better spend some somber moments in contemplation of how we are going to live after our working career is over. If we don’t, our working career will never end.

Thought for the Moment — We will persevere through this national tragedy and personal loss. In time, we will find healing and recovery; and, in the face of all this evil, we remain strong and united, “one Nation under God.”

— President George W. Bush

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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