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The Future of Medicare

Approximately 76 million Americans born between 1946 and 1964 are expected to retire in the next 28 years. In 2001 about 39 million Americans were enrolled in Medicare, and that number is expected to swell to 77 million in 2030. Meanwhile, the ratio of workers to beneficiaries is expected to decline by over 40 percent between 2001 and 2030, and thus the number of persons who help finance Medicare through payroll taxes will decrease as the number of persons receiving Medicare benefits increases. According to a Bush Administration Fact Sheet, cash flow deficits in the Medicare program may begin as early as 2016.

These figures have alarmed both politicians and voters, who have demanded that something be done to save Medicare from possible future of bankruptcy and chaos. Proposals to “fix” the system have varied from conservative efforts aimed at “privatizing” Social Security and Medicare by allowing workers to invest their payroll deductions in the securities market to more liberal efforts aimed at placing Social Security and Medicare funds in a “lock box” to keep them safe from tampering and theft.

Following the inauguration of George W. Bush as the 43rd president of the United States, Congress began debating the future of Social Security and Medicare. However, much of the nation’s domestic social agenda was temporarily placed on hold after the terrorist attacks in New York City and Washington, D. C., on September 11, 2001. Nonetheless, in December of 2001 the U. S. House of Representatives unanimously passed the Medicare Regulatory and Contracting Reform Act. H.R. 3391. The bipartisan bill was intended to streamline the complex and cumbersome rules governing Medicare so that doctors spend more time with patients and less time on paperwork. However, the bill did not address any issues concerning Medicare’s long-term financial solvency. With the enactment of the Medicare Prescription Drug Improvement and Modernization Act of 2003, legislators hoped to contain the costs associated with prescriptive drugs by making the system more competitive, ultimately helping to contain overall costs of Medicare.

Inside The Future of Medicare