Framing Medicare Reform

Reducing Medicare’s growth is critical today. The Medicare Trustees’ first forecast following the passage of the Affordable Care Act (ACA) indicated that by 2050, total Medicare spending would be almost a third lower than the pre-ACA forecast. Yet, these lower spending forecasts assume that the ACA’s stringent new spending controls are actually realized, which is unlikely. This report analyzes two policy levers that can potentially bring down federal Medicare spending to the same annual spending levels as forecast assuming the ACA’s provisions are realized. But, they don’t rely on the unlikely savings attributed to the ACA—provisions that require price ceilings and other restrictions that would impede seniors’ access to care. Our proposed policy levers include raising the Medicare eligibility age (MEA) and means-testing the government’s Medicare contribution. The financing reform could and should be followed by a more fundamental structural reform leading to a market-oriented program.

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