Tuesday, February 03, 2004

The Future of Medicare


Today, the New York Times has awoken to what has long been obvious - In "Companies Limit Health Coverage of Many Retirees", the Times describes how more and more retirees are losing their health care coverage, and shares a projection from a Princeton health economist that "Twenty years from now, no company will offer retiree health care". Meanwhile, the projected price tag for the "prescription benefit" addition to Medicare has already been increased by from $395 billion to $534 billion over the next ten years - and that still assumes that employers won't be dumping their retirees into the plan, as obviously will be the case.

Paul Krugman dissects the Bush budget, asking,
So what will it take to get the budget deficit under control? Unless Social Security and Medicare are drastically cut — which is, of course, what the right wants — any solution has to include a major increase in revenue.
I think it is perhaps an overstatement to suggest that all of the right wants to drastically cut Social Security and Medicare, although it seems apparent that significant factions on the right see such cuts as necessary for maintaining Bush's enormous tax cuts for the rich. But here's the rub - the elderly tend to vote, and they're not going to vote for a President who reduces their Social Security benefits and slashes Medicare. Meanwhile, employers will continue to eliminate health insurance subsidies for retirees, dump their retirees into high cost pools, drop prescription coverage, and otherwise shift as much of the cost for retiree medical care onto the government.

It is possible to engineer cuts in Social Security - but only over time. Social Security was parodied on the Simpsons a few years ago, with Marge Simpson asking Homer's elderly father about his abundance of cash:
Marge: "Where'd you get all the money?"

Abe: "The government... I didn't earn it, I don't need it, but if they miss one payment I'll raise hell!"
The parody, of course, reflects that Social Security has never actually been a government savings program. It is a "pay as you go" program, floated by the contributions of working men and women, with today's retirees receiving far more in benefits than they paid in. But you can't simply cut off the money that many retirees expect, and have used in building their retirement budgets, even if they can "afford to survive" without it - not, that is, without an extraordinary political backlash. You have to phase in changes over time - which would mean instructing the workers who are presently paying for the program that it will ultimately be means-tested and that they might not receive any benefits, and warning workers presently in their forties to start budgeting for a retirement without Social Security benefits. (This on top of "... and you'll be paying for your own health insurance.")

No Republican administration is going to effect such cuts - not as long as the elderly keep voting in large numbers, and can swing a state like Florida from red to blue. And not as long as the working classes, thoroughly drilled in neo-Republican "me first" philosophy, would balk at paying for a social program they won't ultimately receive. At best, they can dream for a future Democratic administration which will clean up some of the budgetary mess Bush has created - so they can point to a fixed Medicare system and whine about "tax and spend" Democrats.

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