Is Medicare About to Run Out?

Rep. Paul Ryan (R-WI) claims his recent budget proposal will “save Medicare.” Medicare, he says, will run out of money in the next ten years and is “headed for a painful collapse.” Ryan’s plan, as I have explained, doesn’t actually keep Medicare funded at the same level. Instead he proposes to cut Medicare benefits now—returning that money to the wealthy in the form of new tax breaks—so that they won’t be cut later. Ryan claims that by privatizing elements of Medicare, he will increase competition and keep health care costs down. But according to the analysis of the non-partisan Congressional Budget Office, under Ryan’s plan “most elderly people would pay more for their health care than they would under the current health care system.”


Democrats, of course, have been accusing anyone who voted for Ryan’s plan of wanting to end Medicare.  That’s overstating the case, although it is probably fair to point out that the radical changes to the program Ryan proposes would end up costing seniors more money. And, of course, Republicans used the same “MediScare” strategy—claiming that Obama’s health care reform bill would destroy Medicare—against the Democrats in 2010.

Lost in all this political posturing is that Medicare is not in any grave danger. The latest Medicare trustees report says that as currently constituted the program will begin to spend more than it takes in by 2024, largely because the economic recovery has been so much slower than expected. As Maggie Mahar says, that doesn’t mean that the program will collapse in 2024, but only that it some time in the next 13 years, Medicare will either have to cut costs or increase revenues.

As Eric Zorn documents, politicians have been regularly claiming that Medicare was on the verge of bankruptcy almost since the program was created in 1965. That’s not to say that rising health care costs aren’t a serious issue in the U.S., or that the Medicare program doesn’t need to be reformed in some ways. But the constant assertions that unless Medicare benefits are slashed immediately the program will collapse are completely unwarranted. Those are the real MediScare tactics.

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