It’s been said that Social Security is the “third rail” of American politics. The same can be said, however, for the other two entitlement programs – Medicaid (which assists the poor) and Medicare (which assists the elderly). Everyone acknowledges that they’re underfunded and pose a real fiscal threat to the nation’s health… but nobody wants to talk about it, because to do so is political suicide.

Ignoring the problem, however, isn’t helping anyone…

Suggestion #24: Overhaul Medicare.

Medicare was created in 1965 by President Lyndon Johnson, who asserted that the high cost of insurance was hurting the nation’s elderly, so that the government needed to step in. The idea was popular – heck, who wouldn’t want to help vulnerable old people? – and it took off. Too much, in fact – as a report by the Joint Economic Committee Republicans points out, Medicare was originally forecast to cost about $12 billion in 1990 … and actually cost $110 billion. Oops!

Since everyone pays into the system over the course of their lives through payroll tax deductions, everyone expects to get these benefits when they retire. Accordingly, any mention of cuts to the program, or tweaking it in any way, is met with shrieks of protest. Immediately, politicians fall to their knees, apologize, and promise to never, ever, touch Medicare – in fact, they hope to shore it up with more money! (The elderly, in case you haven’t guessed, are a very powerful voting bloc).

But seriously, guys – it’s time to get real. We can’t bury our heads in the sand any more, pretending that just this last little infusion of money will fix things. At the end of the day, the program is fundamentally flawed. Ideally, the government wouldn’t be in the business of providing health care benefits for senior citizens at all – they’d let businesses compete for the business (sure, they consume more health care – and would be more expensive to insure – but that’s what insurance is, after all.)

Alas, that’s unlikely to happen any time soon. So in the absence of getting rid of Medicare, I propose a few modest changes: 

  1. Allow senior citizens who would rather use private health insurance to do so – and don’t penalize them. Currently, seniors are allowed to use other health insurance programs – but if they do so, they forfeit their Social Security benefits (a program that they’ve also paid into throughout their lives via payroll tax deductions). This is akin to blackmail, and needs to end.
  2. Means-test Medicare benefits, so seniors who are able to shoulder more of their health care costs do so. Those truly in need will still receive coverage, and those who can pay part of their own costs will be more mindful of their expenditures.
  3. Pay seniors their Medicare benefits through a voucher system. Consumers can use the money that would have been spent on their Medicare coverage to purchase a private plan that best meets their needs.

The Medicare problem needs to be addressed – and soon – by courageous members of both parties. If Democrats and the GOP face the hard facts together, they’ll both take the hit… and then move forward.