Guest commentary: Medicare worth preserving, improving and expanding
By THOMAS O'ROURKE
As the saying goes, the more things change, the more they stay the same. Medicare is a classic example.
It was passed in 1965 after decades of contentious opposition from organized medicine and politicians fearful of "socialized medicine." Medicare was a political compromise. The need was readily apparent. In the 1950s only 15 percent of the elderly had health insurance. Today, Medicare covers some 49 million Americans, 95 percent of people 65 or older, as well as many people who receive Social Security disability benefits. Total expenditures for Medicare in 2010 were $522.8 billion which equals 12 percent of the federal budget and more than one-fifth of national health expenditures.
Although widely popular with the American public, Medicare still has its detractors, who would be glad to see its curtailment or demise. The problem is, critics realize that a frontal assault aimed at crippling Medicare is not politically feasible. So they go to Plan B — transform Medicare from its original intent of a social insurance program into a welfare program.
A frequently cited proposal is to make Medicare a "means tested program" where benefit eligibility is determined by income. So what's wrong with that? At face value the idea of means testing makes sense.
As Sen. Claire McCaskill remarked, "Donald Trump may need medication, but he certainly doesn't need the government to pay for it." This idea of means testing has been around for decades. Given the current economic and political environment, it has received increasing attention. Historically touted by Republicans, it recently has received additional traction from some leading Democratic lawmakers who have suggested that incorporating a greater degree of means testing could be helpful in reaching common ground with Republicans in the often contentious ongoing deficit reduction talks.
Medicare has succeeded because the benefits apply to people of all incomes. The problem is that means testing reduces support of wealthier beneficiaries annoyed by paying additional charges while receiving reduced or no benefits. Wealthier individuals then look for private options, as are currently available in Medicare Advantage plans. Without the support of wealthier individuals who possess much stronger political clout, Medicare will evolve from a universal social insurance program into a welfare program like Medicaid.
Not surprisingly, Medicaid lacks the public support of Medicare. This is readily evident in the terminology of each program. Those with Medicare are called "beneficiaries" since they paid into the program. In contrast, people receiving Medicaid are called "recipients" since their welfare benefits are received at the expense of others. To the extent that Medicare becomes means tested, public support will erode or be replaced, at best, by a two-tiered program with "boutique medicine" for the very wealthy and a de facto Medicaid type program with millions of middle and lower income people receiving reduced access and benefits.
Some understanding of health costs and health insurance may be illustrative. Health insurance contains a subsidy. In private insurance there is a redistribution of funds from the healthy to the sick. Tax funded insurance has the same subsidy and usually adds another redistribution of funds from upper to lower income groups. Paying for health care and receiving health care benefits should be two different issues and not linked in any way.
Given the fact that health care is inevitable, very unpredictable, unevenly distributed (5 percent of people account for 50 percent of costs and 20 percent account for 80 percent of costs), expensive and unaffordable by large segments of the population, it is essential that costs be pooled based on ability to pay and not medical need. This can be accomplished by progressive financing. There should be little or no concern if Donald Trump receives Medicare benefits so long as "The Donald" pays his share based on ability to pay and thus enhances the pool for those less healthy and wealthy.
Rather than means testing we should look to improve Medicare: Expand Medicare to cover the entire population, ensure the same benefits to all, expand coverage (Medicare now pays for only 48 percent of the health care cost of beneficiaries), and increase efforts aimed at progressive financing. Most, but unfortunately not enough, of Medicare is funded by general revenues and by uncapped payroll taxes, both progressive taxes in contrast to regressive methods such as insurance premiums and out-of-pocket payments.
The above suggestions should not be considered original, innovative or radical. To the contrary, embracing Medicare for all would just bring the U.S. a bit closer to the rest of the industrialized world where universal coverage, with better health outcomes, at far less cost is the norm.
Thomas O'Rourke is professor emeritus of community health at the University of Illinois at Urbana-Champaign.