The Medicare trustees report, released this week, reinforced the urgent need to reform the federal health insurance program for seniors. Medicare is on an unsustainable path, and sticking with the status quo guarantees a Medicare crisis in the not-so-distant future. As The Heritage Foundation’s Bob Moffit and Rea Hederman explain, the dramatic growth in Medicare spending and the accumulation of massive debt are the central fiscal challenges facing Medicare.
The Heritage Foundation’s newly released Federal Budget in Pictures 2012 edition (previously called the Budget Chart Book) shows Medicare’s dire fiscal situation in clear and compelling graphics.
Unless Congress and the President enact Medicare reforms, spending on this program will more than double by 2050 as a share of the economy. Medicaid and Social Security spending is also on track to rise dramatically, bringing the total share of spending on the major entitlements to nearly 20 percent of the economy within a few decades.
This unsustainable growth in entitlement spending puts pressure on key government priorities, including providing for America’s national defense. The explosive growth in spending on Medicare and other entitlements are crowding out spending on defense. Last year’s contentious Budget Control Act sequestration would slash the defense budget while leaving entitlements—the biggest part of the federal budget—on a collision course with insolvency.
As the chart below shows, spending on Medicare is growing much faster than other government spending. To rein in out-of control government spending and debt and ensure that the program is fiscally sustainable, it is imperative to reform Medicare—and reform it now. If America does not get control of entitlement spending, it runs the risk of following Europe down the path of fiscal and economic crisis.
The Heritage Foundation has a plan to reform Medicare and solve the entitlement-driven spending and debt crises. Saving the American Dream would solve Medicare’s fiscal challenges by first repealing Obamacare and then converting Medicare to a premium support program that guarantees beneficiaries access to a wide range of health plans and providers and lowers costs through the powerful forces of competition. Now is the time to take Medicare off the path to crisis and strengthen the program through patient-centered reforms.