September 16, 2021

Democrats' Irresponsible Plan to Undermine Medicare


KEY TAKEAWAYS

  • The Biden administration and Democrats in Congress have put forth policies that would distort, disrupt, and undermine Medicare.
  • One proposal calls for lowering the eligibility age from 65 to 60, giving Washington bureaucrats even more control over health care and increasing the burden on taxpayers.
  • The Medicare program is already on shaky financial ground and is projected to reach insolvency within the next four years.

Democrats in Congress support lowering the Medicare eligibility age, shifting more people to government-sponsored health coverage and harming the finances of the program. Their proposal, supported by President Biden, would allow people to sign up for the program when they reach 60 years old, a move that liberals likely see as a path to government-run health care for all. Swelling Medicare with millions of new enrollees will further damage the program’s already unsustainable finances. This proposal would also replace private insurance with more government-administered coverage and take away choices from millions of Americans, many of whom currently have coverage, like it, and want to keep it.

The High Cost of Expanding Medicare

Health Care

More Government-Run Health Care

Medicare was established in 1965 and provides health coverage to seniors and people with disabilities. The program consists of four parts. Part A, hospital insurance, mainly covers inpatient care in hospitals and skilled nursing facilities. Part B, supplemental medical insurance, covers visits to the doctor and other outpatient care. Part C, also called Medicare Advantage, is an optional, private alternative that covers more benefits than traditional Medicare. Part D was added in 2003 as optional coverage for prescription drugs.

To become eligible for traditional Medicare coverage, workers and their employers must pay payroll taxes for at least 40 quarters – 10 years. Those who do not meet the 40-quarter requirement pay premiums for Part A hospital coverage. People expect the program to be available to them in their retirement years, and most people at age 65 enroll in Parts A and B when they are eligible. People with certain disabilities are also eligible to join the program, regardless of their age. Almost 63 million people are currently enrolled in Medicare, with the majority of them using it as their primary source of health insurance.

Democrats argue the program should be expanded in order to increase nationwide health care coverage. Senator Bernie Sanders recently said: “We will expand [Medicare’s] benefits and bring more people in by lowering the eligibility age to 60 … I’ll be delighted if we can expand Medicare to cover hearing, vision, and dental benefits.” Democrats are determined to ignore the consequences this shift would have on beneficiaries and on the health care system as a whole.

Shifting more people into a government-sponsored program would harm the finances of health care providers as well, since Medicare pays far less than other insurers do for the same services. Doctors, hospitals, and other providers would likely shift even more costs to their other patients to make up the difference in payment. According to one analysis, patients with private coverage paid hospitals 247% of what Medicare paid for the same care. In light of the added payment strain introduced by the Democrats’ irresponsible plan, we could also see an increase in hospital and practice closures, as well as physician retirements. This would jeopardize all Americans’ access to high-quality care, particularly in rural areas and underserved communities. This Medicare disruption and distortion proposal risks exacerbating our growing health care professional shortage, doubling down on some of its root causes and imperiling access for some of the most vulnerable Americans.

Looming insolvency

President Biden’s proposed budget supported “giving people age 60 and older the option to enroll in the Medicare program with the same premiums and benefits as current beneficiaries.” While he has not offered much more detail on his preferred plan, a group connected with the Hoover Institution analyzed several options. They found that the expansion would result in “nearly 14 million 60- to 64-year-olds enrolling in Medicare Part A, about 8 million would enroll in Part B, and 6.5 million would enroll in Part D.” The analysis also concluded that the expansion would increase gross Medicare expenditures by $82.9 billion in 2022, add about $394 billion to the federal debt over the next decade, and accelerate the program’s insolvency by two years, to 2024. Avoiding this would require a payroll tax hike of 12%, forcing working families to finance the program’s increased demands through a regressive tool that directly diminishes take-home pay.

Medicare’s Part A trust fund for hospital coverage is on shaky ground financially and is expected to reach insolvency in 2026. The Medicare trustees have reported that Medicare spending is on track to double over the next decade. This warning should compel lawmakers to immediately work in a bipartisan way to address the program’s looming insolvency, to protect current Medicare benefits for seniors who rely on the program today, and to ensure it can be around for future beneficiaries who plan to rely on it in retirement.

Instead, Democrats are determined to expand the program to younger enrollees and add benefits that private plans cover more efficiently. Adding hearing, vision, and dental under traditional Medicare is duplicative of the coverage provided through Medicare Advantage. Seniors enjoy their high-performing MA plans, which come at little to no additional cost. Expanding Medicare is unnecessary, duplicative, and will come with higher costs, less access, and harm the quality of care providers are able to provide. 

Issue Tag: Health Care