The Financing Needs of a Restructured Medicare Program

Medicare Brief No. 5 ~ September 1999

Summary:
Through the Bipartisan Commission on the Future of Medicare and other efforts, policy makers have begun to redesign Medicare to meet long-term challenges that include an aging population, rising per capita health care costs, and an inadequate benefit package. However, no proposal as of yet fully addresses Medicare’s financing needs. Without any changes, revenues from taxpayers to the program would need to more than double in 2030 over 1998 levels in order to support current benefits. Expanding Medicare to cover prescription drugs or to address other inadequacies in benefits would make Medicare’s financing needs even greater. The Breaux/Thomas premium support proposal to the Bipartisan Commission would have required about 80 percent more in revenues from taxpayers in 2030 than Medicare needed in 1998. Although it is important to ensure that Medicare operate as efficiently as possible, this analysis suggests that any comprehensive discussion about Medicare’s future must include the need for new revenues.