STEVE HUNTLEY email@example.com January 2, 2012 9:02PM
Updated: January 3, 2012 2:09AM
I’m old enough to remember when cars came without seat belts, when a gallon of gasoline could be had for a little more than two bits, and when a stamp cost a nickel. My first full-time job after college paid $100 a week, a nice sum in 1965. My first new car was the hottest chariot of its day — a 1965 Ford Mustang (seat belts accenting its sporty character) with a price tag of $2,500. And 1965 was the year Congress enacted Medicare.
These numbers should remind us that the promises made to the elderly — soon to encompass huge numbers of baby boomer retirees — were made at a much different time. Costs were lower. People didn’t live as long. Unavailable were today’s revolutionary — and usually quite expensive — medical treatments and tests.
I’ve contributed to Medicare every year of its existence. Yet, it’s a myth that seniors have paid the costs of their Medicare services, as demonstrated by the research of economists Eugene Steuerle and Stephanie Rennane of the Urban Institute think tank.
Their study showed that a two-income couple earning $89,000 a year would pay $114,000 in Medicare taxes during their careers but could expect to receive $355,000 in medical care in retirement. They could get prescriptions, doctor visits and hospital services valued at three times their contribution to Medicare.
Medicare combined with Medicaid and Social Security add up to an entitlement time bomb — they’ll consume all tax revenues by 2052, according to a Heritage Foundation analysis — for the people who’ll be stuck with the bill: working Americans. In 1950, there were 16 taxpaying workers for each retiree; by the time the baby boomers all retire, there will be two workers for each retiree.
Entitlement reform has to happen. House Budget Chairman Paul Ryan (R-Wis.) proposed a common-sense approach last year, moving people under age 55 to a premium support program. Those over 55 and approaching retirement would stay with the current system. Democrats responded with demagoguery designed to scare senior voters, accusing Ryan of advocating a voucher plan that would kill Medicare and saddle seniors with an expensive, unreliable system of private insurance.
Nonsense. A voucher program would give retirees money to buy any insurance, be it from a reputable company or a fly-by-night fraud. Ryan’s plan calls for government support for premiums paid only to insurers meeting stringent standards. What’s more, the government would pay more for the very sick and the poor and less in support for the rich. Competition among insurers would lower costs. That’s what happened with a similarly designed program for retiree drug benefits — it came in 40 percent under projected costs.
Last month, Ryan teamed with moderate Democratic Sen. Ron Wyden of Oregon to offer a revised plan to let future seniors choose between traditional Medicare and private insurance under the premium-support system.
The White House responded to this bipartisan compromise with renewed demagoguery, charging it would let Medicare “wither on the vine.” Republican presidential candidate Mitt Romney called the Ryan-Wyden announcement a “big day for our kids and grandkids” by offering a way forward to resolve the looming entitlement crisis. Should Romney win the GOP nomination, voters will face a clear choice on Medicare reform — Romney’s support of common-sense compromise or Obama’s political Mediscare rhetoric.