Everyone knows that tough choices lie ahead. It's up to our political leaders to explain that reforms are essential to make Medicare secure for future generations of seniors.
There are many possible ways to reduce Medicare spending. A broad reform debate will enable people to better understand the tradeoffs involved.
To make sure program benefits remain available for those who need them most, lawmakers should consider eligibility requirements and need-based benefits. By raising the eligibility age for Medicare to 67 from 65, for example, $124 billion would be saved.
The bipartisan Simpson-Bowles commission has proposed gradually limiting the Medicare benefits the wealthy receive. Last fall, President Obama proposed higher Medicare premiums for high-income seniors as part of the deficit reduction plan that he submitted to the Congressional "supercommittee." Obama's plan would save about $20 billion over 10 years in Medicare.
Increasing premiums beneficiaries pay for Medicare doctors' coverage to 35 percent of program costs from the current 25 percent could save $241 billion. Modernizing Medicare's benefit package to include co-payments, deductibles and an out-of-pocket maximum could save about $14 billion through 2018. A cutback in subsidies for "Medigap" supplemental insurance would save $92 billion.
A still-bolder proposal going beyond Medicare itself would be to remove the distortion in the tax code that keeps health insurance tied to employment. The tax write-off for employer-provided health care benefits is the single largest tax expenditure. It is estimated to cost the government more than $1 trillion over the next five years. Capping the tax exclusion in 2018 and then phasing it out over 10 years would result in massive savings that could be devoted to shoring up Medicare and other programs for seniors.
The American people are ready to accept some difficult choices as part of a comprehensive deficit reduction program. It is time for Congress to begin the debate.
Douglas Schoen is a political strategist and author of “Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System” (Harper 2010), co-authored with Scott Rasmussen.