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Commentary

Medicare? But that’s for old people
Michael Cannon, Washington Times, 4-1-06

Michael Cannon, a senior fellow at the Cato Institute, points out that the Medicare entitlement represents a significant wealth transfer from workers to retirees; from the young to the old—a transfer that changing demographics is making increasingly untenable.

My dad turns 65 today. He will not be pleased that I just gave away his age. He could pass for much younger. This is no April Fool's Day column. Dad really was born on April 1, 1941. Not too long ago, he really was taken to be the son of his not-much-older brother.

Today is going to be tougher than other birthdays, he explained recently. I think it's partly because for most of Dad's life, 65 was a lot older than it is now. Men who reach 65 today live 27 percent longer than they did when Dad was my age. The odds that they won't live to age 75 have dropped a cool 40 percent. Dad probably doesn't much care to be dazzled with mortality statistics just now. But from the standpoint of his wife, children and granddaughters, those trends are excellent news.

There's also that other thing that happens at age 65. It's time to sign up for Medicare, Uncle Sam's health insurance program for old people. Dad was 24 when President Johnson handed former President Truman the nation's first Medicare card. I doubt it occurred to Dad that someday one of those cards would have his name on it. …

Dad and President Truman have something in common: they both showcase the moral complexity of Medicare. Medicare paid Truman's medical bills despite the fact that he never paid Medicare taxes. Dad has paid his Medicare taxes from day one. Yet today's seniors still get more out of the program than they put in. Mom and Dad will probably net over $200,000 on the deal.

The way we pay for Medicare is that young workers pay taxes to support their elders, and later generations return the favor. It looks good on paper, but breaks down in practice. Seniors have more political clout than younger generations, which means that since 1965, every generation of seniors has successfully lobbied for greater Medicare benefits.

Cannon's point is well taken—and stands as yet another reason why Medicare needs a consumer-friendly overhaul to ensure that future generations of truly needy seniors can rely on its benefits.



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