Saturday, April 29th, 2017

What’s at Stake

What’s at Stake

The plaintiffs believe the coercive rules deny individuals their civil liberties, violate their right to privacy, and deny them the right to make choices about their own health care.

In addition to the legal, due process, constitutional and discrimination issues raised by the Social Security Administration’s actions, which should concern all Americans, the plaintiffs also believe the rules are self-defeating from a financial perspective.   Why?   Because if even a small percentage of Medicare-eligible retirees were to opt out of the program it could save taxpayers about $1.5 billion per year now and $3.4 billion or more per year by 2017, relieving some of the financial pressure on the fiscally insolvent Medicare program.   

According to the 2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and the Federal Supplementary Medical Insurance Trust Funds , Medicare expenditures reached almost $432 billion in 2007, or approximately 3.2 percent of U.S. Gross Domestic Product (GDP). With the retirement of the Baby Boomers, the first of whom (those born in 1946) will become eligible for Medicare after 2010, these expenditures will increase significantly in coming decades.

Indeed, using intermediate economic and demographic assumptions, the Medicare Trustees estimated that the Federal Hospital Insurance Trust Fund will be insolvent by 2019.

If just 1 percent of current retirees chose not to participate in Medicare, Medicare expenditures would decrease by about $1.5 billion per year immediately and by approximately $3.4 billion per year by 2017.   Program cost savings would continue to increase by greater amounts for several decades as the “Baby Boomers” retire.

We calculated this savings estimate using data from the Centers for Medicare and Medicaid Services, the Medicare Payment Advisory Commission, and the annual report of the Medicare Trustees.