Dear Congress: Medicare Is Dying
A Letter to Speaker Boehner, Leader Pelosi, Leader Reid, and Leader McConnell

Honorable John Boehner Honorable Harry Reid
Speaker of the House Majority Leader
U.S. House of Representatives United States Senate
Washington, DC 20515 Washington, DC 20510

Honorable Nancy Pelosi Honorable Mitch McConnell
Minority Leader Minority Leader
U.S. House of Representatives United States Senate
Washington, DC 20515 Washington, DC 20510

POL-Con-0063-Stock


Dear Speaker Boehner, Leader Pelosi, Leader Reid, and Leader McConnell:

Medicare is in serious financial trouble. Spending is growing faster than Medicare's revenue, and there is no end in sight. This year, Medicare is expected to spend $568 billion. In ten years, spending will reach almost $1 trillion. According to the Congressional Budget Office, the hospital insurance trust fund will run out of money by 2020. Medicare is too important to allow it to fall into bankruptcy.

The budget resolution that will soon be adopted by the House of Representatives is likely to include a call for Medicare reform. The key to that reform is premium support, which can restore fiscal health to the program by promoting more efficient and effective health care for America's seniors.

The premium support concept has long been recognized as a prudent approach to financing health and retirement programs. It is a new way of structuring the financing of Medicare benefits that gives beneficiaries more control over their health choices and spending. Medicare beneficiaries would be granted an annual subsidy that reflects the costs associated with their health status and their financial wherewithal. This premium support arrangement would reverse the incentives now in Medicare that promote wasteful spending.

Premium support would benefit seniors and taxpayers. Medicare would remain a guaranteed benefit, but seniors would be free to choose a health plan that best meets their needs. Having more control over their health care spending would encourage consumers and patients to make better health care choices. It would stimulate more innovative and accountable competition by health care providers and give them incentives to better coordinate the care of their patients. Enhanced competition could offer seniors relief from rising Medicare premiums. Just as important, this reform could begin to ease the crushing tax burden imposed by the current program on our children and grandchildren.

The concept of premium support has been endorsed by numerous experts and commissions--including a majority of the National Bipartisan Commission on the Future of Medicare, chaired by Senator John Breaux and Representative Bill Thomas in 1999, and the Bipartisan Policy Center's Task Force on Debt Reduction, chaired by Alice Rivlin of The Brookings Institution and former Senator Pete Domenici in 2010.

We believe that policymakers should not wait any longer to address the growing fiscal crisis in this country. Responsible reform of Medicare is a major component of any plan to place the country back on a sustainable fiscal path.

Sincerely,

[Affiliations are listed for identification only, and do not imply endorsement by the individual's institution.]

Joseph R. Antos, Ph.D.

Wilson H. Taylor Scholar in Health Care and Retirement Policy

American Enterprise Institute


Douglas Holtz-Eakin, Ph.D.

President

American Action Forum

Grace-Marie Turner

President

Galen Institute

Mark Pauly, Ph.D.

Professor of Health Care Systems

The Wharton School, University of Pennsylvania


Benjamin Zycher, Ph.D.

Senior Fellow

Pacific Research Institute

June O'Neill, Ph.D.

Wollman Distinguished Professor of Economics

Baruch College, City University of New York

Merrill Matthews, Ph.D.

Resident Scholar

Institute for Policy Innovation

John S. Hoff

Diana Furchtgott-Roth

Director, Center for Employment Policy

Hudson Institute

Gail R. Wilensky, Ph.D.

Senior Fellow

Project HOPE

Michael A. Morrisey, Ph.D.

Professor

University of Alabama at Birmingham


Andrew G. Biggs, Ph.D.

Resident Scholar

American Enterprise Institute

Stephen T. Parente, Ph.D.

Minnesota Insurance Industry Professor of Health Finance

Professor, Department of Finance

Carlson School of Management

University of Minnesota

Paul J. Feldstein, Ph.D.

Robert Gumbiner Professor

The Paul Merage School of Business

University of California

James C. Capretta

Fellow, Economics and Ethics Program

Ethics and Public Policy Center


Thomas Campbell Jackson

Trustee

Galen Institute

Thomas R. Saving, Ph.D.

Director and Jeff Montgomery Professor of Economics

Private Enterprise Research Center

Gregory Conko

Senior Fellow

Competitive Enterprise Institute

Fred L. Smith, Jr.

President

Competitive Enterprise Institute

David Gratzer, M.D.

Senior Fellow

Manhattan Institute for Policy Research

Roy Ramthun

President

HSA Consulting Services

Scott W. Atlas, M.D.

Senior Fellow, Hoover Institution

Professor and Chief, Neuroradiology

Stanford University Medical Center

Stanford University

Robert B. Helms, Ph.D.

Resident Scholar

American Enterprise Institute


Thomas P. Miller

Resident Fellow

American Enterprise Institute

Doug Badger

Senior Fellow

Center for Medicine in the Public Interest


Kevin A. Hassett, Ph.D.

Senior Fellow and Director of Economic Policy Studies

American Enterprise Institute

Michael J. O'Grady, Ph.D.

Senior Fellow

NORC at the University of Chicago
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About the Author

 

Joseph
Antos
  • Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), where his research focuses on the economics of health policy — including the Affordable Care Act, Medicare, the uninsured, and the overall reform of the health care system and its financing. He also studies the impact of health care expenditures on federal budget policy.

    Before joining AEI, Antos was assistant director for health and human resources at the Congressional Budget Office (CBO). He has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget, and the President’s Council of Economic Advisers. He recently completed a seven-year term as health adviser to CBO, and two terms as a commissioner of the Maryland Health Services Cost Review Commission. In 2013, he was also named adjunct associate professor of emergency medicine at George Washington University.

    Antos has a Ph.D. and an M.A. in economics from the University of Rochester and a B.A. in mathematics from Cornell University.



    Follow Joseph Antos on Twitter.

  • Phone: 202-862-5938
    Email: jantos@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 2028625826
    Email: Neil.McCray@aei.org

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

  • Phone: 202-862-7157
    Email: khassett@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202-862-5862
    Email: emma.bennett@aei.org

 

Robert B.
Helms
  • Robert B. Helms has served as a member of the Medicaid Commission as well as assistant secretary for planning and evaluation and deputy assistant secretary for health policy at the U.S. Department of Health and Human Services (HHS). An economist by training, he has written and lectured extensively on health policy and health economics, including the history of Medicare, the tax treatment of health insurance, and compared international health systems. He currently participates in the Health Policy Consensus Group, an informal task force that is developing consumer-driven health reforms. He is the author or editor of several AEI books on health policy, including Medicare in the Twenty-First Century: Seeking Fair and Efficient Reform and Competitive Strategies in the Pharmaceutical Industry.
  • Phone: 2028625877
    Email: rhelms@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202.862.5855
    Email: Kelly.Funderburk@AEI.org

 

Thomas P.
Miller
  • Thomas Miller is a former senior health economist for the Joint Economic Committee (JEC). He studies health care policy and regulation. A former trial attorney, journalist, and sports broadcaster, Mr. Miller is the co-author of Why ObamaCare Is Wrong For America (HarperCollins 2011) and heads AEI's "Beyond Repeal & Replace" health reform project. He has testified before Congress on issues including the uninsured, health care costs, Medicare prescription drug benefits, health insurance tax credits, genetic information, Social Security, and federal reinsurance of catastrophic events. While at the JEC, he organized a number of hearings that focused on reforms in private health care markets, such as information transparency and consumer-driven health care.
  • Phone: 202-862-5886
    Email: tmiller@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 202-862-5826
    Email: Neil.McCray@aei.org

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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