Despite the euphoria of last year’s bipartisan budget agreement, Medicare still faces financial disaster. Medicare Part A, which pays hospital bills, will be running a deficit again in 2004. The Medicare Trust Fund, which is more an internal set of IOUs than a real asset, will be exhausted by 2010. At the same time, Medicare Part B, which pays for physician care, is spending far more than it takes in. In fact, by 2010, the combined deficit for Medicare Parts A and B will be more than $150 billion! And that doesn’t even begin to account for the baby‐boom retirement to come.
Given the program’s financial problems, the president’s proposal to allow people who retire early to join the Medicare program in exchange for paying a low monthly premium makes no sense at all.