Analysis: Why Are There Misunderstandings Around the Solvency of Medicare?

A nonpartisan public education campaign and separating discussions about Medicare reform from public debates over reducing budget deficits or reducing tax cuts would help resolve issues surrounding Medicare's long-term financial sustainability, according to an analysis inThe New England Journal of Medicine.

The researchers analyzed data from six public opinion polls conducted in 2013 with 1,013 to 2,017 U.S. adults in a project sponsored by the Robert Wood Johnson Foundation. They found a considerable gap in beliefs between the general public and experts on the financial state of Medicare, a difference that likely has an impact on policymakers' efforts to reform the program. The public has shown little support for major policy changes that look to reduce Medicare spending to lower the federal deficit, according to the analysis.

The researchers found many members of the public are misinformed about Medicare spending growth. More than 60 percent of poll respondents believe spending is rising faster now than it was five years ago. However, spending growth has actually slowed in recent years, according to the report. A recent Congressional Budget Office report found Medicare spending growth slowed from 7.1 percent annually between 2000 and 2005 to 3.8 percent from 2007 to 2010.

Despite their perception of rising spending growth, many polls showed a low level of support — 10 to 38 percent — for major reductions in Medicare expenditures for the purpose of reducing the deficit, according to the analysis. This lack of support could possibly come from misguided beliefs, the researchers stated in their report. For instance, only 53 percent of respondents knew Medicare is one of the largest federal budget items, and only 31 percent believe it's a major driver of the budget deficit.

Furthermore, although Medicare beneficiaries receive about $3 in benefits for every $1 they paid into the program, two-thirds of respondents believe enrollees get benefits worth about the same or less than what they paid in taxes during their working years and in premiums for their current coverage, according to the researchers. In terms of Medicare's future, 67 percent of the public is more likely to favor policy changes that aim solely to improve the long-term financial status of the program rather than to reduce the deficit or pay for a tax cut.

Based on these findings, the researchers concluded policymakers who call for major Medicare cuts to shrink the deficit could likely face backlash from the American public. A broad-based public education campaign to correct misconceptions about how Medicare works financially and separating the Medicare discussion from debate over taxes and deficit reduction would help to close the gap in perception between experts and members of the public, according to the analysis.

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