How to pay for Medicare's next 50 years

How to save for a long and healthy life
How to save for a long and healthy life
How married couples can boost Social Security benefits
How married couples can boost Social Security benefits
Social Security: By the numbers
Social Security: By the numbers

Medicare turned 50 on Thursday, and that's not all the program's overseers have to celebrate. Before Medicare was created in 1965, almost half of all Americans over 65 had no health insurance; in 2015, all but 2 percent do. (Tweet This)

Medicare's critics are legion, but its spending per beneficiary has increased more slowly than private health insurance spending per enrollee: Medicare's spending has grown an average of 7.5 percent annually between 1969 and 2013, compared with private health insurance's 9.1 percent.

Spending growth has been particularly slow in recent years. The average annual growth rate in total Medicare spending dropped from 9 percent between 2000 and 2010 to 4.1 percent from 2010 to 2014, according to a Kaiser Family Foundation analysis of Medicare data. The latest Medicare trustees' report projects a surplus in the hospital insurance trust fund, a key Medicare funding source, from 2015 to 2023.

Read More3 ways to avoid high health care costs in retirement

Some experts argue that this reflects the influx of boomers into their retirement years, leading to a disproportionate number of beneficiaries at the younger end of eligibility who probably require less health care.

"Medicare has been growing at historically low growth rates. At the moment, the sense is the pressure is off for dramatic changes to the program," said Tricia Neuman, director of the Kaiser foundation's Project on Medicare's Future.

But the relative good times may not continue as more boomers age into the years when they need the most medical care. The Kaiser foundation calculates that the number of Medicare beneficiaries age 80 or above will increase from 11.3 million in 2010 to 30.9 million in 2050. (Tweet This)

In addition, Kaiser found that Medicare per-capita spending increases almost every year from age 65 to 96.

Neuman thinks the expansion of the Medicare population, particularly the costlier segment, will eventually put pressure on lawmakers to act. If "the federal government doesn't finance the care, either the costs will shift to seniors or Medicare will need to find some other way to reduce the growth in spending," she said.

Some possible policy moves are already in the air. Take means testing. Legislation signed into law this year added a means test to the prescription drug coverage part of Medicare, with higher income beneficiaries paying more for the benefit. The change, which was intended to partly offset the cost of a fix to Medicare's payment rates to physicians, uses the same income cutoffs as a means test applied earlier to the Medicare section covering physician and medical care. Seniors with incomes over $85,000 (or $170,000 for a couple) now pay more for those types of coverage.

A recent poll by the Kaiser foundation found that 60 percent of people over age 65 overall support increasing Medicare premiums for wealthier seniors, as did 67 percent of people aged 55 to 64.

However, the means tests are not large revenue sources for the government, since only a small percentage of beneficiaries have incomes at the current means test thresholds. AARP puts the median income of a Medicare beneficiary at $23,500, said Ariel Gonzalez, director of health and family advocacy in AARP's government affairs office. (The Kaiser Family Foundation predicts that will only rise to $28,250 by 2030.)

That also means few seniors feel the impact of the means tests. But the National Committee to Preserve Social Security and Medicare calculates that the means tests will hit more and more seniors over time, affecting about 10 percent of the Medicare population over the next two decades. Some experts believe means testing will eventually be applied to other parts of the program, as well.

"There is going to be another argument about how you fix the long-term challenges for [Medicare]," said Julian Zelizer, a political historian at Princeton and the author of "The Fierce Urgency of Now: Lyndon Johnson, Congress and the Battle for the Great Society." Medicare's long-term viability will probably require either cuts in benefits or higher taxes, he said, and "the most powerful way to do that politically is some kind of differentiation in who has to pay."

Read MoreYou won't believe where these retirees are living

Others have proposed changing the age at which people become eligible for Medicare. Some argue that gradually raising the age of eligibility from 65 to 67 is the answer. The Congressional Budget Office estimated in 2012 that such a change would generate about $113 billion in savings over 10 years. But in 2013 it revised that estimate down to $20.6 billion over 10 years because people enrolling at 65 are likely to be healthier than older enrollees and may also have insurance through an employer, reducing the cost to Medicare.

Linda Fried, dean of Columbia University's Mailman School of Public Health, has argued for actually lowering the age of eligibility to 50, but only for preventive health care. "In sharp contrast to 50 years ago, we now know that prevention matters for most diseases and conditions ... and that prevention works into the oldest ages," she wrote in June in the Journal of the American Society on Aging.

Read MoreAre workplaces ready for older workers?

AARP has strong views on preserving Medicare, strongly opposing any cuts in benefits or increased costs for beneficiaries. Gonzalez argues that better coordination of patient care can reduce costs. For example, when a patient is discharged from the hospital, their compliance with doctors' instructions increases when they receive follow-up calls from caregivers making sure they know what to do, he said.

The group is also advocating changes in Medicare's rules on prescription drugs. Currently, Medicare is the nation's largest purchaser of prescription drugs and the only one not allowed to negotiate on drug prices, Gonzalez said. If it were given that authority, it could reduce what it spends on drugs.

AARP also favors another idea related to prescription drugs, requiring drugmakers to pay a rebate on drugs covered by Medicare for low-income beneficiaries. The Congressional Budget Office has estimated that policy could save more than $100 billion over 10 years.

Read MoreRetiree health-care costs may be more than you think

Whatever policymakers eventually decide to do about Medicare's future, it will have important implications for people planning for retirement. Melissa Spickler, a managing director at Merrill Lynch Wealth Management, said health care is always a wild card in planning for later years.

"We somehow have to come up with a way to make sure that as we live longer, we are able to live comfortably and still be aware of how much we need from a health standpoint and possibly a long-term care standpoint," she said.