Intergenerational Gratitude Is the Essence of Social Insurance

Article excerpt

People get older. And many of them get sicker. The hard question for this year's election, and for voting in years to come, will be: How much of the bill should we pay for our fellow Americans, and how much of the burden should we bear as individuals and family members?

Medicare spending in 2010 was $524 billion, or 15 percent of the total federal budget, exceeded only by spending for Social Security and defense, each of which account for about 20 percent of the budget. The Medicare share will rise to 17 percent by 2020, and keep climbing as more baby boomers reach eligibility.

The Longevity Issue

Baby boomers moving into advanced age is a welcome problem because it means more people can expect to live to a ripe old age. Life expectancy at age 65 is about 20 years for women and 17 years for men.

Today's elders also are less likely than prior generations to suffer from debilitating heart disease, to be disabled or live in nursing homes. And they are more likely to go to the doctor. Average spending in 2006 for a Medicare beneficiary between ages 65 and 74 was $5,887, but that figure jumped to $12,059 for people ages 85 and older, according to a Medicare primer by the Kaiser Family Foundation.

What Americans decide to do about Medicare spending depends upon viewpoint. For those who think Medicare is an indispensable part of the social safety net, increasing revenues through higher taxes will be essential to keep it sound. For those who see the growing federal deficit as a direct threat to the future of American prosperity, Medicare spending must be slowed, even if it means placing a bigger financial burden on individuals.

Raising the Eligibility Age

As one solution to reining in Medicare spending, politicians propose raising the age of eligibility. Former Massachusetts Gov. Mitt Romney wants to boost the age by one month per year, beginning in 2022. Eventually, he would peg the increase to the increase in longevity. The year 2022 is also offered by Rep. Paul Ryan (R-Wisc.) and Democratic Sen. Ron Wyden of Oregon in their plan to overhaul Medicare. President Obama hasn't offered his Medicare plan yet, but it, too, would delay any start in raising the eligibility age.

Raising the age could cause financial hardship, according to a report by the Congressional Budget Office (CBO). …