[L]et’s take a closer look at what will actually happen after 2023, and think through what it means for the generation between 45 and 65, most of whom will still be alive by 2033 when Ryan’s privatization scheme will be fully in effect. Every new senior entering Medicare after 2023 will receive a voucher to buy insurance. According to the Congressional Budget Office, that will pay for less and less of their coverage. By the time 2033 rolls around, their vouchers will cover about one-third of the cost of care.I can tell you that people in their 50s are thinking about retirement and medicare --- a lot. It's a part of our lives through our parents and it's something we know that it works. This hideous scenario can and should be avoided if people know what's in store.But what will the overall Medicare-eligible population look like in 2033, when the entire 77-million strong baby boom generation will be in its golden years? According to the CMS actuary’s office, there will be 85.4 million Medicare-eligible seniors that year, up from 48.6 million today. Their projection for 2023 is about 69 million. That means roughly 16 million newly retired, active, more politically engaged seniors will be receiving sharply lower benefits and making sharply higher co-pays (call it higher taxes) to pay for health care, while about 53 million will be on the old plan that pays about 80 percent of costs. Every year after 2033, the ranks of seniors in the costly plan will grow, while there will be a declining number of seniors under the old, more financially attractive plan. Moreover, those in the old plan will be the most expensive people to take care of because they are the oldest in the cohort, thus consuming the vast majority of Medicare’s funds.
So what we will have is two groups of seniors: one younger, healthier, more politically active and making significantly higher payments for health care insurance out of pocket; and the other older, sicker, poorer and being coddled with the financially “bankrupt” older plan. This is precisely the situation that people in line for state and local government pensions face. Taxpaying private sector workers, whose employers took away their pensions years ago, resent paying higher taxes for pension benefits earned by their neighbors who went to work for government and never had their pensions taken away.
The politics of resentment has a long history in America. One is reminded of the retort by Guilded Age tycoon Jay Gould, who in 1896 faced a strike among his railway workers at a time of high unemployment. “I can can hire half the working class to kill the other half,” he shrugged.