ANALYSIS/OPINION:
It is no longer debatable that America faces an entitlement crisis of mammoth proportions. The unfunded liabilities of Social Security and Medicare alone are over $100 trillion - and almost $70 trillion of that is in Medicare.
Many Republicans, given the opportunity to back an imperfect but courageous Medicare reform plan set forth by the party’s leading grown-up, House Budget Committee Chairman Paul Ryan, have run for political cover.
Many of them, along with most Americans, are hoping there is a better way to address the problem created by entitlement programs swallowing up almost two-thirds of the federal budget - a percentage that will soar as baby boomers reach the age of eligibility.
There is a better way, but its not the Ryan plan, because his proposal is ultimately insufficient for salvaging Medicare, for several reasons.
First, the gap between government subsidies and health care premiums will steadily widen as participants grow older. This widening gap leads to the second problem - the sense of insecurity generated by dependency on private insurance rather than government guarantees.
This sense of insecurity, in turn, is based on the third problem - the unlikely prospect of a competitive market in private health insurance for the elderly. All of this adds up to the bottom line: The program envisioned in the Ryan plan is highly unlikely to draw enough popular support to be politically feasible.
The only way to solve the problem of Medicare while sustaining the concept of retirement health care security is by evolving to a system of retirement health savings accounts, or RHSAs.
If we give Americans the choice to redirect their Medicare taxes to RHSAs, they will start to build nest eggs that will grow into substantial amounts by retirement. These accounts should be supplemented by high-deductible, catastrophic insurance policies.
RHSAs will reinvigorate the doctor-patient relationship while providing consumers with greater choice, better quality of care and lower costs as the system builds a genuine free market in health care. Such a reform would wean Americans off of their dependency on government while simultaneously solving the impending Medicare crisis and dramatically decreasing government obligations.
And here is the foundation upon which this solution rests: Because it is based on allowing people to put money into their own accounts, along the same lines as IRAs and 401(k) savings plans, it is likely to be not only politically feasible, but downright popular.
Another element that makes this program attractive is that it would evolve over a period of 20 to 25 years, guaranteeing uninterrupted benefits to those currently at or near the age of eligibility who have planned their retirements around the availability of Medicare, while restoring confidence, security and self-reliance among those more than 20 years away from retirement.
For those who are chronically unemployed, live with medical conditions that require consistently costly treatment or are otherwise unable to participate fully in this system, a public-private solution could be forged, consisting of a significantly scaled-down version of government assistance combined with risk pools shared by insurance providers.
By thinking big, we can see the problem through the lens of opportunity rather than crisis.
•T Tim Donner is the owner of a Northern Virginia television production company.
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