Saving the U.S. Budget
By Arnold Kling
In this paper, I describe an approach that relies on cuts to future entitlement spending. The most important idea is to transform Medicare into a combination of a voucher and extreme catastrophic insurance.
Under the proposal here, as the U.S. population ages, the spending on catastrophic coverage will go up, and the amount available for vouchers will decline, particularly on a per capita basis. By 2020, this plan will allow vouchers of $6,000 for seniors aged 75 and up, with only $2110 for seniors aged 65-74. By 2030, the voucher for seniors aged 75 and up would be $5,000, and the voucher for seniors aged 65-74 would be just $700. Keep in mind that these figures would go up by the ratio of nominal GDP in those years to nominal GDP today. The net result is that by 2030 seniors would have to fund much of their health expenses, including health insurance, out of their personal savings.
Keep in mind that the status quo is for the U.S. government to pretty much go bankrupt by 2030. If you do not like these cuts in Medicare, you need to find some sort of alternative.
The paper has a lot of useful numerical analysis.