Forecasting the future of Medicare and Medicaid

USA Today has an excellent overview of how baby boomers view the government's pledge to deliver the full Medicare and Medicaid benefits it has promised, along with an analysis of the long term prospects for both government-run health care programs. (Source: "Will aging boomers lose benefits?" Jan. 17, 2008.) According to the non-partisan Congressional Budget Office (CBO), "Without changes, combined spending on Medicare for elderly and Medicaid health care for the poor is projected to jump from 4% of the overall economy to 19% by 2082, thereby crowding out spending for other programs." The article also quotes the American Academy of Actuaries as saying "eliminating the 75-year Medicare deficit would require an immediate 122% increase in the 2.9% Medicare payroll tax, a 51% cut in benefits, or a combination of the two." However, Peter Orszag, head of the CBO, says significant savings in Medicare might also occur by better targeting payments to more cost-effective medical treatments.