Senior Health - The Price We Pay For Health Care For Senior Citizens

"Free medicine is medicine paid for by somebody else." — William F. Buckley Jr.

In 1964, the Johnson administration projected that Medicare would cost $12 billion by 1990. The chart shows that the actual figure was close to $113 billion, and it keeps on growing. "More ominously," grouses conservative John Hood, "Medicare conditioned an ever growing legion of elderly recipients to think that health care could and should be obtained at virtually no apparent cost. Because of this development, 20 percent of the voters in our elections — the retirees — now believe that they paid for their benefits throughout their working lives and deserve them, or even enhanced versions of them." And this is despite the fact, says Hood, that the elderly are better off financially than any other segment of the population.

Perhaps you have heard some of the grumbling or seen the headlines, like this one: "The Coming War Between the Old and the Young": 'The elderly …12 percent of the population … consume 60 percent of federal social spending.'" And there's nowhere to go but up. The first of 76 million Baby Boomers will retire in 2011, will start to collect Social Security, will become eligible for Medicare. They will live longer than earlier generations, and they will have access to medical innovations that may keep them alive well past what has long been thought of as the proper time to go. (In 1975 the average age of death among Medicare beneficiaries aged 65+ was 78.8; in 1997 it was 81.2). The number of Medicare beneficiaries is projected to nearly double to 72 million by 2030.

The chart above does not include substantial Medicaid expenditures on the elderly. Medicaid is the government health care safety net program for lower-income people or those impoverished by high medical expenses. Medicaid payments for the elderly came to $142 billion in 1998, up from $65 billion in 1990, a 118% jump in just 8 years.

Rettenmaier and Wang analyzed Medicare expenditures between 1965 and 1997 to determine (among other things) whether the rapid growth could be blamed on "the extraordinary sums spent on patients nearing the end of life." They found that Medicare spending in the last two years of life among those who died in 1997 averaged $28,616.³¹ This does not include substantial out-of-pocket expenditures by the patient and his/her family.³² While the cost of dying is high, it "does not appear to be growing any faster than the rest of Medicare spending," despite expensive technological innovations.

The Congressional Budget Office (CBO) estimates that net mandatory spending for Medicare will total $223 billion in 2002 and $3.2 trillion from 2003 through 2012, if the law governing Medicare spending in 2002 remains unchanged. In testimony before the U.S. Senate Committee on the Budget in February 2002, David M. Walker, Comptroller General of the United States, stated: "Absent structural changes in entitlement programs for the elderly, in the long term persistent deficits and escalating debt will overwhelm the budget." Can anyone summon the political will to effect these changes? AARP, the nation's most powerful seniors organization with 30 million+ members, favors adding a prescription drug benefit to Medicare. CBO estimates that a basic Medicare drug benefit for low-income beneficiaries³³ would increase Medicare spending by a total of $57 billion over the 2003-2012 period (on top of the $3.2 trillion already projected for Medicare). As Senator Everett Dirksen is alleged to have said: "A billion here, a billion there, and pretty soon you're talking real money."

An increasing number of Americans are elderly and frail. Who should pay for long-term care services for them? It might be prudent to start saving money for a long retirement.

Sources: Chart: Medicare and Health Care Chartbook, U.S. House of Representatives, Committee on Ways and Means, February 27, 1997, http://www.access.gpo.gov/congress/house/ways-and-means/. John Hood, "Senior Slump," National Review, October 23, 2000, p56+. "Entitlement Programs Will Overwhelm the Budget, Cato Daily Comment, March 14, 2002, http://www.socialsecurity.org/dailys/03-14-02.html. Andrew J. Rettenmaier and Zijun Wang, "Explaining the Growth of Medicare: Part II," National Center for Policy Analysis, Brief Analysis No. 408, August 6, 2002, http://www.ncpa.org. Robert Wood Johnson Foundation, Grant Results Report, Monograph on High-Cost Illness at the End of Life. Summary, http://www.rwjf.org/reports/grr/021577s.htm.