What does the Heritage Foundation have to say about saving Medicare:Study released May 10, 2011 (Part 7)

Michael F. Cannon on Government Run Health Care

“Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” Heritage Foundation, May 10, 2011 by  Stuart Butler, Ph.D. , Alison Acosta Fraser and William Beachis one of the finest papers I have ever read. Over the next few days I will post portions of this paper, but I will start off with the section on Medicare.

The Bottom Line

By moving to a premium-support program, Congress can introduce the powerful
forces of consumer choice and competition into Medicare, forcing health plans
and providers to deliver value for taxpayer and beneficiary dollars. Similar
approaches to health care financing and delivery have been used in Medicare Part
D and the FEHBP, the program that covers Members of Congress. The record shows
that this approach can successfully control and slow the growth of health care
costs while increasing patient satisfaction.

Medicare today is less a traditional social insurance program, in which
beneficiaries pay for their benefits, and is becoming more of an income transfer
program. Today’s enrollees are not, in fact, “paying for” their Medicare
benefits, since it is really a “pay as you go” system with today’s workers
paying for today’s beneficiaries. Even so, payroll taxes pay for just a portion
of one part of Medicare, and the premiums that seniors pay for the other parts
cover less than a quarter of those costs.

Taxpayer subsidies account for 85 percent of total Medicare program costs. If
Medicare is left unreformed, our children and grandchildren will pay those
higher taxes even as they work and save to provide for their own families.

By reducing the level of tax subsidies for seniors with higher incomes, the
Heritage plan reduces both the burden on future taxpayers and dependence on
government. By adding catastrophic protection against serious illness and
targeting funding to those who are most in need, the plan strengthens Medicare
as safety-net insurance for all Americans and guarantees them better health and
economic security. Finally, by reducing the role of bureaucracy and red tape in
the delivery of medical care, the Heritage plan makes the practice of medicine
more attractive, thereby encouraging dedicated and talented individuals to join
the health professions.

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