SCIENCE&HEALTH: Future of Medicare remains uncertain

Increasing Social Security costs and a decreasing population
that is subsidizing the program make its future availability for
younger generations ““ such as today’s college students
““ uncertain. There are a number of challenges facing the
program now that could threaten Medicare’s future viability
for today’s young people.

In 2006, there will be a 4.1 percent increase in monthly Social
Security payments to beneficiaries, which is the largest such
increase since the 5.4 percent increase in 1991.

The previous four years have seen increases of less than 3
percent, but high energy prices, rising health care bills and an
increase in premiums for Medicare Part B ““ which helps cover
doctors’ services, outpatient care, and other non-hospital
services ““ are behind the larger increase in 2006.

These increases in Social Security payments are much needed
because so many retirees rely on Social Security as their only
source of income.

And while the government tries to make appropriate increases
every year based on the Cost-of-Living Adjustment, dramatic
increases in energy costs and Medicare Part B premiums put a
serious dent in other basics that these people may have to pay for
in terms of daily living expenses.

This Social Security increase will give the average retiree an
additional $39 per month, which is believed to help offset premium
costs. However, because Medicare Part B premiums are expected to
increase from $10.30 to $88.50 per month, a portion of the Social
Security increase will essentially be going toward paying for the
Medicare Part B increase.

With Medicare Part B, the retiree only has to pay a quarter of
the cost through Social Security. The remaining three quarters are
subsidized by taxpayers’ dollars.

While this may be financially advantageous compared to other
private insurance options, which can cost upward of four times the
cost of Medicare Part B, there is a growing discrepancy in the
intergenerational transfer ““ the concept of the younger and
employed generation paying for the older and retired citizens.

The baby boom generation is entering retirement, so the
proportion of those retired will be greater than those employed.
This creates a problem when it comes to having enough tax dollars
to pay the three-quarter subsidy for Medicare Part B.

Reform is needed to ensure that Medicare is still around for
future generations, but some options for reform could lead to
problems in the beneficiaries’ access to quality health
services.

If reimbursements to providers are reduced, providers may reduce
the number of Medicare enrollees, resulting in the denial of
certain needed procedures or tests. Alternatively, providers could
cut costs and then minimize the number of unnecessary tests or
procedures performed on their enrollees, which would benefit both
the provider and the beneficiary.

There is also the option of making beneficiaries more
responsible for their health by increasing their contribution or
their Medicare Part B premium, which might make them less likely to
go to the doctor for more minor ailments.

On the other hand, however, the beneficiary may no longer seek
medical attention in the early stages of disease, but instead wait
until the symptoms become severe, which is often more harmful to
the beneficiary and more expensive in the long run for the
system.

Medicare Part B is in need of a revamp if the baby-boomer
generation expects to have access to quality health services
““ and if our generation expects Medicare to be around when we
retire.

Fisher is a student in the School of Public Health.