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Medicare & Medicaid

Medicare and Medicaid are our nation's two largest public health care programs.  Medicare primarily serves elderly Americans and consists of several different medical insurance programs.  Medicaid is a federal-state health and long-term care program for low-income families.

Costs of Medicare Versus Dedicated Revenue

Medicare Part A is funded through the dedicated Hospital Insurance (HI) tax, while the other parts are paid from general revenues and beneficiary premiums.  As of 2005 the HI tax was no longer sufficient to cover current benefit payments, and the trust fund bonds are being redeemed with money taken from general revenues (or by expanding the debt). 

Rapidly rising health care costs and an elderly population growing in numbers and longevity are driving the cost of Medicare up at an unsustainable rate.  Program expansions like the Medicare prescription drug benefit have only made a bad situation worse.  While the long-term finances of Social Security tend to get more attention, the challenges ahead for Medicare and Medicaid are far more daunting.

Medicare Primer

In 2000 we published a Medicare primer outlining some basic information on Medicare including options for reform.  We are working on an update to the primer to reflect changes brought by the Medicare prescription drug benefit and the return of budget deficits.  In the meantime, the 2000 version, still serves as a reference to help people understand our fastest growing entitlement.

Prescription Drug Benefit

Signed into law in 2003, the Medicare prescription drug benefit is the largest entitlement expansion since the creation of Medicare in 1965.  It will not come into effect until 2006, at which point we will see our budget deficits swell from this rapidly growing benefit.  Rising prescription drug costs may require some sort of government spending, but this program is needlessly large and expensive.

• Over the Fiscal Brink (Facing Facts)

• Why The Medicare Drug Benefit Is Bad Policy (Facing Facts)

• Concord Coalition Asks: “What Happened To Medicare Cost Control?” (News Release)

• Concord Coalition Warns That Medicare Expansion, Tax Cuts And Deficits Are A Toxic Fiscal Prescription (News Release)

For More Information

• Medicare Trustees Report

• Testimony of Concord Co-Chair Bob Kerrey, Senate Finance Committee (March 3, 2002)

• Breaux-Thomas Medicare Reform Proposal: Building A Better Medicare For Today And Tomorrow, National Bipartisan Commission on the Future of Medicare, March 16, 1999.

• Archive of Older Medicare Information

• Chart Talk:  Budget & Medicare

• Chart Talk:  2005 Medicare Chart Talk

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