Will Medicare Cuts Be Enough?

By Lindsay Hochberg

With the government deficit burgeoning, President Obama is trying to contain spending by curbing entitlement program expenditures. Entitlement programs currently account for approximately fifty percent of the government’s annual budget, and politicians on both sides advocate for a reduction in spending in these areas. But the question is, where exactly should spending be cut? Many point to Medicare and Medicaid.

Medicare covers the expenses of the elderly, regardless of socioeconomic standing, and this facet of the program is subject to reform. The Obama administration proposed a means tested program for Medicare, which would mean that wealthier recipients pay a higher premium than others. Those on the left are agitated by this proposal since it could change the scope and focus of the Medicare program. This policy could shift Medicare into a “government safety net” for low income seniors. In addition to this, President Obama suggested raising patient fees in order to help shoulder the costs of rising military healthcare coverage. All together the president’s reforms would cut approximately 400 billion dollars from the federal budget.  Some analysts see the proposed cuts as a way to pacify intra-party hostility, but claim that the budget cuts will not do enough to reduce the deficit.

Although the President’s current budget is estimated to reduce the deficit to 743 billion dollars, down from 973 billion dollars, economists worry about how America’s changing demographics will affect Medicare expenditures in the future. With the increasing number of baby boomers enrolling in Medicare and receiving Social Security, the proposed reductions will not be enough to stop the deficit from growing in the long run. It is expected that those eligible for both Social Security and Medicare will grow by 40% by 2023. Due to this, it will be a balancing act from congress to see how it can accommodate rising costs while lowering the deficit.

Source: http://online.wsj.com/article/SB10001424127887324240804578414570933697386.html