December 30, 2010

Baby Boomers Fear Outliving Medicare: Poll

Beginning January 1st, the first of the nation's 70 million baby boomers will begin turning 65, the age at which they qualify for Medicare.  But a new Associated Press-GfK poll finds that many boomers fear the program may become insolvent, and worry they may outlive their benefits.

In 2011 alone, a record 2.8 million boomers will qualify for the program, or one every eight seconds, with some 4.2 million expected to enter the program by 2030.

By a ratio of 2-to-1, participants in the AP-GfK poll said they believed they would not be able to rely on Medicare throughout their retirement.

Some forty-three percent said they did not expect to be able to depend on Medicare for the remainder of their lives, while just 20 percent said they believed the program is financially secure.

However, the poll also revealed a willingness among adults of all ages to sacrifice to preserve Medicare.  For instance, with respect to the retirement age at which people become eligible for Medicare, 63 percent of baby boomers dismissed the idea of raising this age to keep the program solvent. Yet, when forced to choose between raising the retirement age or reducing benefits, 59 percent said raise the age and maintain the benefits.

The poll also revealed differences according to age, gender and income-levels among the poll's baby boomer respondents. For example, baby boomer women were significantly less optimistic than men about Medicare's future.

Some 46 million elderly and disabled people are currently covered by Medicare, at an annual cost of roughly half a trillion dollars.  With skyrocketing medical costs already straining the program's finances, the addition of 70 million boomers is expected to shake the foundation of the health insurance program to its core.

Here's how the numbers work out: when the last of the boomers reaches age 65 about 20 years from now, Medicare will be covering more than 80 million people. By that time, the ratio of workers paying taxes to support the program will have plummeted from 3.5 for each person receiving benefits today, to just 2.3.

"The 800-pound gorilla is eating like mad and growing to 1,200 pounds," said economist Eugene Steuerle of the Urban Institute during an interview with the Associated Press (AP).

"The switch from worker to retiree status has implications for everything," he said.

Some Republicans and a few Democrats have suggested phasing out the program altogether, and providing each retiree a voucher to help them buy private medical insurance instead. 

While the poll found 51 percent of Americans opposed to such a plan, those born after 1980 favored it by 47 percent to 41 percent.   However, seniors opposed it by 4-to-1, along with a majority of baby boomers.

In general, Medicare changes that do not involve a full-scale transformation of the program tended to draw more support, particularly when the survey forced participants to choose between foregoing benefits altogether or making some other kind of sacrifice.

For instance, overall, 61 percent of Americans favored raising Medicare taxes to avoid a reduction in benefits.  

The current payroll tax is 2.9 percent on wages, split evenly between workers and their employers.  The new health care law adds an additional 0.9 percent on earnings over $200,000 for individuals and $250,000 for couples filing jointly.

The poll found that 53 percent of Republicans would rather pay higher taxes, while 38 percent preferred reducing benefits.  Among those in their 20s, 61 percent said they would be willing to pay higher taxes to preserve benefits. 

Just 29 percent of baby boomers preferred holding the tax rate steady and reducing benefits.

"If people are forced to the wall and something has to be done about the financial shape of the program, they would rather take their medicine by raising taxes and moving the eligibility age than having the benefits cut when they retire," Harvard polling analyst Robert Blendon told the AP.

The poll found that 54 percent also favored requiring those on Medicare to pay higher co-payments and deductibles so payments to doctors did not have to be reduced. Support for this provision was particularly strong among seniors, with 62 percent saying they'd be willing to pay more so that reimbursements to doctors won't be cut and more doctors continue to participate in the program.

GfK Roper Public Affairs and Corporate Communications conducted the AP-GfK Poll Nov. 18-22, 2010, performing landline and cell phone interviews with 1,000 adults nationwide.  The poll's questions and results can be viewed at http://www.ap-gfkpoll.com.