Prepare Citizens For Future Without Medicare

St. Paul, Minnesota - Everyone under the age of 50 should be prepared for a future without Medicare, says Citizens' Council on Health Care (CCHC).

In only 23 years, Medicare Part A (hospitalization) will be insolvent, according to the just released Medicare Trustees Report. This is four years sooner than reported by last year's trustees. In 2026--only 61 years after Medicare was enacted into law--the hospital trust fund will run out of money unless health care services are sharply reduced, payments to health care practitioners are cut significantly, or payroll taxes are almost doubled.

"Today's 45-year-old has contributed approximately 20 years of payroll deductions to Medicare. At age 65, he will have contributed at least 40 years of payroll deductions. At age 68, he will discover that most, if not all, of those dollars are gone," says Twila Brase, president of Citizens' Council on Health Care.

"Those who have spent the last 38 years paying for the Medicare system, are about to discover that they paid for someone else's health care future, not their own," she added.

Severe Reductions in Forecast

"Without changes in the Medicare program, closing the projected HI [Hospital Insurance] gap between revenues and expenditures would require that benefits be reduced by 42 percent, or income from the payroll tax would need to be increased by 71 percent," reported yesterday's press release from the U.S. Department of Health and Human Services.

CCHC Offers Suggestions

The following suggestions have been offered by CCHC to address the pending insolvency of Medicare, and to promote greater self-sufficiency of senior citizens in the future:

  • Medicare means testing (seniors with financial means receive less Medicare subsidy).
  • Repeal of federal prohibition against "cash for care" payments by senior citizens.
  • Federal income tax deductions for any individual who purchases own health insurance.
  • Medical or personal savings accounts attached to individually-purchased life-long health insurance policies.

"The Bush plan to entice Medicare recipients into HMOs through drug coverage is not the solution to Medicare's financial crisis. This will only lead to severe rationing of health care services for the elderly," said Brase.

"The Bush administration should immediately put forward proposals that require a greater portion of the resources of financially secure Medicare recipients, and that release today's taxpayers to purchase their own life-long health insurance policies," adds Brase.


Troubling Statistics from 2003 Trustee Report

2002 - 7.8 percent of total federal INCOME taxes used for Medicare Part B (clinic visits, outpatient care)
2077 - 32.7 percent of total federal INCOME taxes used for Medicare Part B

2003 - 6.8% withheld from Social Security payment for Medicare Part B
2020 - 12.4% withheld from Social Security payment for Medicare Part B

2003 - about 4 workers for every Medicare Part A (hospitalization) recipient
2077 - about 2 workers for every Medicare Part A (hospitalization) recipient

2003 - Medicare costs are 2.6 percent of gross domestic product (GDP)
2035 - Medicare costs are 5.3 percent of gross domestic product (GDP)
2077 - Medicare costs are 9.3 percent of gross domestic product (GDP)

The Medicare reports are available on-line at:

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CCHC is an independent non-profit free-market health care policy organization located in St. Paul, Minnesota

Citizens' Council on Health Care
1954 University Avenue West, Suite 8, St. Paul, MN 55104
Phone: 651.646.8935 / Fax: 651.646.0100, e-mail


Media Contact:

Twila Brase, President
Phone: 651-646-8935 (office)