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Medicare turns 40

Atlanta Journal Constitution

As it turns 40, Medicare may be the greatest success story of the Great Society, but the federal health insurance program is facing a midlife financial crisis. 

Certainly it has lived up to promise President Lyndon B. Johnson made July 30, 1965, as he signed the bill creating Medicare and Medicaid --- its sister health care program for the poor --- into law: "No longer will older Americans be denied the healing miracle of modern medicine." 

At the time, nearly half of the more than 18 million Americans ages 65 or older did not have health insurance. "Most of them," Johnson said, "have low incomes. Most of them are threatened by illness and medical expenses that they cannot afford." 

Today, Medicare covers roughly 42 million people --- 35.4 million elderly and 6.3 million disabled persons --- and that number is expected to double again in the next quarter-century as the Baby Boom generation ages. More than 95 percent of the elderly in America are covered by Medicare. 

But trouble lies ahead for the program, and it's spelled m-o-n-e-y. 

The combination of annual double-digit increases in health care costs plus the onset of boomers' eligibility in 2011 means Medicare will soon face enormous financial problems. 

Last year, for the first time since 1998, Medicare's 1.45 percent payroll tax on both employees and employers did not bring in enough money to fully cover its hospital payments, so the program tapped its trust fund. The Medicare trustees predict the trust fund will be depleted by 2020. 

Although Medicare would be able to pay about 80 percent of hospital benefits that year, the portion would shrink to about 27 percent over the next 75 years if no changes were made. No one in the policy arena expects that to happen. 

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