Bruce Bialosky

The year 1965 brought us a new program aimed at securing health care for Americans over the age of 65. This program is now becoming the centerpiece of the 2012 presidential campaign, yet many Americans don’t understand the basic financial facts about the plan, or why its sustainability is considered so essential to America’s future.

Funded by payroll tax deductions, Medicare was implemented to help pay for medical procedures, hospital costs, and doctor visits. Later a prescription drug benefit was added. Since workers paid for the plan throughout their work years, they naturally felt entitled to this important retirement benefit when they turned 65. Unfortunately, the incoming money wasn’t set aside in a separate trust fund, but was instead borrowed by the federal government to pay for other government expenses. Our leaders put slips of paper into the fund equivalent to IOUs. They called them bonds, but elected officials were borrowing the money, just like they now sell bonds to the Chinese.

So now we have what some believe is a crisis. The amounts being paid out by Medicare now far exceed what we are taking in, and reputable analysts agree that the fund will run dry by 2024 or near that time. The reasons are simple:

• The population of the United States is aging and many people are living much longer.

• Technological innovation has driven up the cost of medicine. Things like MRIs, knee replacements, and heart stents have preserved lives, but cost lots of money.

• Third party payments for services. You may not agree with this point, but when a “customer” doesn’t personally pay for a service, there is usually less concern about the price. Because insurance companies and government programs pay for so much health care, people are less diligent about controlling costs.

In 1965, the cost of the Medicare program was projected to be $9 billion in 1990; it was actually $65 billion. Since then, the number has skyrocketed. Medicare spending was about $560 billion in 2011, and is slated to grow to nearly $1 trillion by 2022 – an amount generally agreed by both political parties to be unsustainable. There may be a few diehards who don’t believe we need a significant change of trajectory, but I haven’t spoken to them.

Now we have a Vice-Presidential candidate who has come out (before he was selected) with a plan to reform Medicare. You can disagree with his proposal, but you can’t disagree with the fact that he has a thoughtful, concrete plan, co-sponsored by Democratic Senator Ron Wyden from Oregon – which makes it bipartisan.

Bruce Bialosky

Bruce Bialosky is the founder of the Republican Jewish Coalition of California and a former Presidential appointee. You can contact Bruce at