Public Agenda and Facing Up include the following overview/analysis here on the Facing Up site. With that said, I've republished it for the purposes of our Medicare blog carnival. The following text provides an overview of the problems associated with America's Medicare system. For the complete Choicework discussion guide on Medicare, go to http://www.facingup.org/node/219/perspectives.

Since its inception in 1965, Medicare, the national health-insurance plan for the elderly, has transformed health care for the nation's retirees and the disabled. Nearly every elderly American is covered by the program, dramatically improving both the health and financial well-being of Americans senior citizens.

So far, we’ve been able to support this popular program through a combination of employee and employer Medicare taxes supplemented by additional government revenues from the general tax base. Unfortunately, several powerful trends spell financial trouble for Medicare in the near future.

One trend is demographic—specifically, the shift toward an older population as the huge baby-boomer generation (born between 1946 and 1964) heads toward retirement and begins to draw Medicare benefits. This will result in fewer and fewer younger workers contributing to the system through payroll taxes at the same time that more and more retires draw benefits from the system. Moreover, today’s retirees are living considerably longer than early generations, and so will be drawing on Medicare benefits for a longer period of time.

As if the retiring baby boomers were not enough of a financial challenge, there’s another problematic trend: rapidly-rising health care costs. When Medicare began, no one anticipated the development of new medical technologies and drugs that are keeping older Americans healthier, but do so at considerable expense. As a result, the cost of Medicare has risen more rapidly than any other government program.

Finally, yet another challenging trend is that fewer and fewer employers offer retirement packages that include health care. As a result, more retirees are dependent on Medicare for health coverage.

Put these three trends together—a huge wave of retirees, spiraling health care costs, and the abandonment of health care benefits by employers—and it’s easy to see why we’re headed for one of two unfortunate results. Either we’re going to lose Medicare as it becomes too expensive to maintain, or we’re going to keep Medicare but bust the federal budget through unsupportable debt.

These appear to be our choices, that is, unless as a nation we face up to the problem and make some tough decisions now that will enable us to provide for the seniors in a sustainable way.