Transcript Issues in Social Security Reform

Medicare Reform: It’s All About
Who Pays
Thomas R. Saving
Director, Private Enterprise Research Center
Jeff Montgomery Professor of Economics
Texas A&M University
Senior Fellow – National Center for Policy Analysis
Immediate Past Public Trustee – Social Security and Medicare Trust Funds
Private Enterprise Research Center
Texas A&M University
To Begin, Some Fundamental Facts
1. Seniors will continue to consume health
care.
2. Health care providers will have to be
compensated.
3. Mandated MIRACLES cannot finance
senior health care.
Private Enterprise Research Center
Texas A&M University
Medicare’s Future: Pre-ACA
CBO-2009
General Revenues
Payroll Taxes
Premiums
Private Enterprise Research Center
Texas A&M University
Medicare’s Future With ACA
CBO-2009
Health Care Providers
Premiums
Private Enterprise Research Center
Texas A&M University
The Future of Senior Health Care: Pre-ACA
Total Senior
Health Care
General Revenues
Out-of-Pocket
Private Enterprise Research Center
Texas A&M University
Senior Health Care’s Future With ACA
Total Senior
Health Care
Health Care Providers
Out-of-Pocket
Private Enterprise Research Center
Texas A&M University
The Taxation Solution
Private Enterprise Research Center
Texas A&M University
Federal Income Tax Increase Required to Fund
Entitlements and Maintain the Rest of Government
130.4%
2050
2040
2030
79.8%
65.1%
2020
42.7%
12.4%
Source: 2011 Social Security Trustees Report, CBO “The Long-Term Budget Outlook,” June 2009 and author’s estimates.
Federal Income Taxes are estimated to be 10.7% of GDP, the 50-year average.
Private Enterprise Research Center
Texas A&M University
Let The Elderly Pay Solution
Private Enterprise Research Center
Texas A&M University
Medicare Premium as a Share of Projected Medium Earner Social Security Benefits
Medicare Transfer is a Constant Share of Federal Non-Entitlement Revenues
175.1%
2050
2040
2030
96.4%
2020
71.6%
47.1%
21.1%
Transfer fixed 2009 share of GDP from Table III.A2 2009 Medicare Trustees Report.
Private Enterprise Research Center
Texas A&M University
The Means Testing Solution
Private Enterprise Research Center
Texas A&M University
% of Elderly Denied Benefits to Balance Medicare
Private Enterprise Research Center
Texas A&M University
Income Cutoff for Elderly Benefit Denial to Balance
Medicare Budget
$2008
Private Enterprise Research Center
Texas A&M University
The Effect of Proposed Reforms
Private Enterprise Research Center
Texas A&M University
Medicare Reform and Unfunded Liability
Percent of Federal Income Taxes
118.7% CBO 2009
2050
2040
2030
61.7%
2020
43.8%
25.1%
18.8%
74.7%
35.5%
24.2%
Private Enterprise Research Center
Texas A&M University
40.5%
41.2%
32.4%
27.0%
25.7%
22.9%
47.3% GDP Indexing
24.2% ACA
12.9%
CPI Indexing
Required Payroll Tax Rate After Medicare Reform
% of Payroll
Pre-ACA
Premium Support
GDP Indexed
Premium Support
CPI Indexed
Out-of-Pocket
Private Enterprise Research Center
Texas A&M University
To End, Some Fundamental Facts
1. Seniors will continue to consume health
care.
2. Health care providers will have to be
compensated.
3. Mandated MIRACLES cannot finance
senior health care.
Private Enterprise Research Center
Texas A&M University