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Medicare and Medicaid
Medicare and Medicaid were formally enacted as amendments to the Social Security Act in 1965. These programs guarantee health insurance for the elderly and the poor. The Medicare program covers most persons age 65 or older and consists of four related health insurance plans, a hospital insurance plan, a supplementary medical insurance plan, and two privately run plans, Medicare Advantage and prescription drug coverage (Mazie, 2012).
The Medicaid health insurance program is designed for low-income persons under age 65 and persons over that age that have exhausted their Medicare benefits. Hospital care, physicians' services, skilled nursing care, home health services, family planning, and diagnostic screening are covered by the plan. The program is funded by the Federal Government and the states. To participate in the plan, states are required to offer Medicaid to all persons on public assistance. Individual states determine the eligibility guidelines for enrollment in their own programs, with Medicaid generally offered to persons whose incomes and assets fall below a certain level. The federal government pays the state's 50 to about 80% of state Medicaid costs. Medicare and Medicaid currently compromise 23% of the federal budget. The number of people on Medicare went up from 43.3 million in 2007 and is expected to blow up to 78 million by 2030 as baby boomers retire (Rachlis, 2009).
The Patient Protection and Affordable Care Act (PPACA), enacted in 2010, significantly affected both Medicare and Medicaid. It was designed to gradually shrink Medicare's drug-coverage "doughnut hole" until it is completely eliminated, a goal set for 2020. The doughnut hole in Medicare Part D begins when a person's annual individual drug expenditures reach a certain amount. Coverage begins again when those expenses reach the "catastrophic" phase of coverage. The PPACA designated some Federal subsidies to be cut, and Medicare payroll taxes for high-income earners were set to increase starting in 2013 (Mazie, 2012).
A number of other steps that have been suggested to mitigate the cost of health care however these steps...
Currently Congress seems unwilling to implement any of these. Lesser steps that have been put on the table also have a political downside, cut payments to doctors, hospitals and other providers, increase seniors' premiums, deductibles or co-payments, reduce the number of treatments that Medicare will cover, restrict eligibility, and the adoption of free-market solutions (Rachlis, 2009).
Discussion
How all of this will affect the economy and baby boomers retirement plans is extremely hard to predict since the current systems of health care and Social Security are fundamentally flawed in and of themselves. The strain of a greater number of retiring and aging citizens on an economic system that is currently in a very tenuous condition could be catastrophic for the future working class generations who are going to have to somehow keep the economy propped up on increasingly shaky legs.
Solutions to this problem are not simple. If left unaddressed one day soon Americans may be faced with the choice of paying retirement benefits to their parents or paying for programs that help their own children. That future is coming, and no amount of wishful thinking will change that. As Carson, Wade, and Hecht (2005) point out America is aging quickly and the support of our elderly will lay an increasing claim upon our national output (p. 159). At this point a combination of these solutions seems the best bet to resolve these obstacles. Just what that combination is going to be remains to be seen.
References
Carson, R.B., Thomas, W.L. & Hecht, J. (2005). Macroeconmic issues today: Alternative approaches, 8th Ed. New York M.E. Sharpe Inc.
Kubarych, R.M. (2004, December 14). Social Security reform: The problem and proposed solutions. Council on foreign relations. Retrieved April 24, 2012, from http://www.cfr.org/economics/social-security-reform-problem-proposed-solutions/p7579
Mazie, D.M. (2012). Medicare and Medicaid. In Encyclopedia Britannica. . Retrieved April 23, 2012, from http://www.britannica.com/EBchecked/topic/372289/Medicare-and-Medicaid
Rachlis, P. (2009, June 13) the rising cost of Medicare and Medicaid in the years preceding 2009. Newark independent examiner. Retrieved April 23, 2012, from http://www.examiner.com/independent-in-newark/the-rising-cost-medicare-and-medicaid-the-years-preceding-2009
Pakko, M.R. (2006, August). Deficits, debt, and trust funds. Federal reserve bank of St. Louis. Retrieved April 23, 2012, from http://useconomy.about.com/library/deficit_debt.pdf
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