Can Medicare Be Preserved While Reducing the Deficit?

A man and woman sign in at a polling center for flu vaccinations.

The politically polarized debate over the role of Medicare in deficit and debt reduction often ignores the accumulating evidence that the program can achieve significant spending reductions without sacrificing Medicare’s essential protections. This brief examines viable reforms to the Medicare system that would bring it in line with federal budget needs.

Key Findings

  • Policy-makers can produce substantial budgetary savings, while preserving--and in some cases, enhancing--the Medicare program.

  • Budget-saving policies could include allowing 65 and 66-year-olds to buy into Medicare, but requiring them to pay more than they do today; increasing premiums and deductibles for middle and high-income individuals, while lowering them for those with incomes below 300 percent of the federal poverty level and limiting out-of-pocket payments for everyone; and increasing the Medicare payroll tax by 0.5 percent.

  • Together these, and other policies, could provide savings and new revenues of about $734 billion for 2013-2022.