Using a single-threshold asset test to determine Medicare eligibility

Since 1965, Medicare, a government program providing subsidized health insurance for the elderly and disabled, has been a major player in the American health care system. Upon inception, it immediately doubled the number of elderly citizens with health insurance, increasing their utilization of health goods and services, as well. While it succeeded in providing the elderly with access to mainstream health care and reducing the risk of catastrophic care expenditures, the programs sustainability is currently in question. Major reforms are needed to reduce spending, or else the tax burden placed on the current workforce will grow exponentially in the coming decades. This paper investigates one of the popular proposals aimed at increasing Medicares solvency: implementing an asset test to serve as a barrier to entry for the wealthiest elderly individuals in the country. I conduct a test to determine the effects of excluding the wealthiest ten percent of eligible beneficiaries on the solvency of Medicares trust funds. I conclude that such an asset test would delay the HI trust fund spending down its reserves by seven years, but could not address the serious problem of rising costs, the principal challenge facing both Medicare and the larger health care system.