George Michael: Can Medicare be saved?

January 18, 2013|By GEORGE MICHAEL

The Herald-Mail published a column last week titled “Safety net under siege” written by David Elliot, the communications director of USAction, a left-leaning advocacy group and propaganda machine. The column focused on the “promise” we owe American citizens about Medicare.

The column was about 50 percent stories of personal interest, which are nice for working up sympathy but do little to help people actually think about the realities of Medicare’s imminent collapse.

Twice, Elliot mentions the “promise” we made to Americans to take care of their medical needs in old age. He ended the column by writing, “We made them a promise. Will we keep it?”

But what if this promise was made by politicians known for not keeping their promises? What if that original promise was based on bogus financial numbers? What if the promise was really a lie?

Medicare is costing much more, hundreds of billions more, than the projections that President Johnson made in 1965. At its start, Medicare’s estimated cost was $3 billion a year. The House Ways and Means Committee thought that Medicare would cost only about $12 billion by 1990 — a figure that included an allowance for inflation. But by 1990, Medicare was actually costing $107 billion a year. Now, it costs more than $500 billion a year.

The major point the Elliot article failed to address — and which is absolutely critical — is this: How much did I pay into the system and how much should I expect to get back?

An employee pays 1.45 percent out of his or her wages for Medicare.  Self-employed people have to pay both as a worker and as an employer, which means they pay 2.9 percent.

For an average wage earner in 1965, the Medicare tax of 1.45 percent would have amounted to about $68 for the year, not enough to cover one doctor’s visit today. By 1975, an average wage earner paid $125 per year into Medicare. By 1985, that cost was $244 per year. 

In other words, someone who paid Medicare taxes for 30 years starting at age 35 and retired in the 1990s would have paid less than $6,000 into the system. How far does that go today? 

Granted, their employer paid another $6,000 on their behalf and inflation distorts the numbers. But even at that, the system is seriously underfunded and unable to pay all the pending obligations. 

Then there is the problem of Medicare fraud. In an article last fall in the New York Times, Kathleen Sharp noted that total health care fraud is a $250 billion-a-year industry with about $100 billion stolen from Medicare and Medicaid, most of it due to bogus billing by unscrupulous health care providers. Those who like to tout the great benefits of government programs are loathe to admit to the rampant fraud existing in those programs.   

The projections of the next 20 years for Medicare are horrendous. The Baby Boomers are starting to collect on their “promise,” and since people are living longer and more expensive treatment options are available, the system is doomed unless a serious correction is made.  

Apparently, the hard-luck stories in the Elliot article are somehow supposed to trump whatever economic realities there are. The Elliot column quoted an angry Jim Brady from Rochester, Minn., who said, “This is my money I am getting back. It is not charity. No one has the right to steal my money.”

Your money? Really? The pittance you paid is supposed to cover everything needed to take care of you for the next 20 years?  Unfortunately, Brady will now have to “steal” money from someone else, a younger taxpayer today, because of his ill-informed understanding of the truth.

Politicians like U.S. Sen. Ben Cardin, D-Md., who like to brag that Social Security and Medicare will not be changed on their watch, have misled citizens like Brady. And someone with a realistic plan to save it, like U.S. Rep. Paul Ryan, is treated with contempt. How short-sighted is that?

Perhaps The Herald-Mail can do its part by publishing columns that deal with the issues we face as a nation realistically and honestly rather than the irrational, emotional appeals to bleeding hearts like Elliot’s.

George Michael, who lives in Williamsport, is a former principal of Grace Academy. His email address is

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