Dear Congress: Medicare Is Dying
A Letter to Speaker Boehner, Leader Pelosi, Leader Reid, and Leader McConnell

Honorable John Boehner Honorable Harry Reid
Speaker of the House Majority Leader
U.S. House of Representatives United States Senate
Washington, DC 20515 Washington, DC 20510

Honorable Nancy Pelosi Honorable Mitch McConnell
Minority Leader Minority Leader
U.S. House of Representatives United States Senate
Washington, DC 20515 Washington, DC 20510

POL-Con-0063-Stock


Dear Speaker Boehner, Leader Pelosi, Leader Reid, and Leader McConnell:

Medicare is in serious financial trouble. Spending is growing faster than Medicare's revenue, and there is no end in sight. This year, Medicare is expected to spend $568 billion. In ten years, spending will reach almost $1 trillion. According to the Congressional Budget Office, the hospital insurance trust fund will run out of money by 2020. Medicare is too important to allow it to fall into bankruptcy.

The budget resolution that will soon be adopted by the House of Representatives is likely to include a call for Medicare reform. The key to that reform is premium support, which can restore fiscal health to the program by promoting more efficient and effective health care for America's seniors.

The premium support concept has long been recognized as a prudent approach to financing health and retirement programs. It is a new way of structuring the financing of Medicare benefits that gives beneficiaries more control over their health choices and spending. Medicare beneficiaries would be granted an annual subsidy that reflects the costs associated with their health status and their financial wherewithal. This premium support arrangement would reverse the incentives now in Medicare that promote wasteful spending.

Premium support would benefit seniors and taxpayers. Medicare would remain a guaranteed benefit, but seniors would be free to choose a health plan that best meets their needs. Having more control over their health care spending would encourage consumers and patients to make better health care choices. It would stimulate more innovative and accountable competition by health care providers and give them incentives to better coordinate the care of their patients. Enhanced competition could offer seniors relief from rising Medicare premiums. Just as important, this reform could begin to ease the crushing tax burden imposed by the current program on our children and grandchildren.

The concept of premium support has been endorsed by numerous experts and commissions--including a majority of the National Bipartisan Commission on the Future of Medicare, chaired by Senator John Breaux and Representative Bill Thomas in 1999, and the Bipartisan Policy Center's Task Force on Debt Reduction, chaired by Alice Rivlin of The Brookings Institution and former Senator Pete Domenici in 2010.

We believe that policymakers should not wait any longer to address the growing fiscal crisis in this country. Responsible reform of Medicare is a major component of any plan to place the country back on a sustainable fiscal path.

Sincerely,

[Affiliations are listed for identification only, and do not imply endorsement by the individual's institution.]

Joseph R. Antos, Ph.D.

Wilson H. Taylor Scholar in Health Care and Retirement Policy

American Enterprise Institute


Douglas Holtz-Eakin, Ph.D.

President

American Action Forum

Grace-Marie Turner

President

Galen Institute

Mark Pauly, Ph.D.

Professor of Health Care Systems

The Wharton School, University of Pennsylvania


Benjamin Zycher, Ph.D.

Senior Fellow

Pacific Research Institute

June O'Neill, Ph.D.

Wollman Distinguished Professor of Economics

Baruch College, City University of New York

Merrill Matthews, Ph.D.

Resident Scholar

Institute for Policy Innovation

John S. Hoff

Diana Furchtgott-Roth

Director, Center for Employment Policy

Hudson Institute

Gail R. Wilensky, Ph.D.

Senior Fellow

Project HOPE

Michael A. Morrisey, Ph.D.

Professor

University of Alabama at Birmingham


Andrew G. Biggs, Ph.D.

Resident Scholar

American Enterprise Institute

Stephen T. Parente, Ph.D.

Minnesota Insurance Industry Professor of Health Finance

Professor, Department of Finance

Carlson School of Management

University of Minnesota

Paul J. Feldstein, Ph.D.

Robert Gumbiner Professor

The Paul Merage School of Business

University of California

James C. Capretta

Fellow, Economics and Ethics Program

Ethics and Public Policy Center


Thomas Campbell Jackson

Trustee

Galen Institute

Thomas R. Saving, Ph.D.

Director and Jeff Montgomery Professor of Economics

Private Enterprise Research Center

Gregory Conko

Senior Fellow

Competitive Enterprise Institute

Fred L. Smith, Jr.

President

Competitive Enterprise Institute

David Gratzer, M.D.

Senior Fellow

Manhattan Institute for Policy Research

Roy Ramthun

President

HSA Consulting Services

Scott W. Atlas, M.D.

Senior Fellow, Hoover Institution

Professor and Chief, Neuroradiology

Stanford University Medical Center

Stanford University

Robert B. Helms, Ph.D.

Resident Scholar

American Enterprise Institute


Thomas P. Miller

Resident Fellow

American Enterprise Institute

Doug Badger

Senior Fellow

Center for Medicine in the Public Interest


Kevin A. Hassett, Ph.D.

Senior Fellow and Director of Economic Policy Studies

American Enterprise Institute

Michael J. O'Grady, Ph.D.

Senior Fellow

NORC at the University of Chicago
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About the Author

 

Joseph
Antos

 

Kevin A.
Hassett

 

Robert B.
Helms

 

Thomas P.
Miller

 

Andrew G.
Biggs

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