Medicare

Don't Exempt Boomers From the Pain of Medicare Reform


Don't Exempt Boomers From the Pain of Medicare Reform

Photograph by Joe Raedle/Getty Images

The next twist in the interminable fight over how best to deal with the federal government’s deficit and debt comes early this week. Wisconsin Republican Representative Paul Ryan will unveil his blueprint for eliminating the federal government’s deficit in 10 years. Ryan gave a preview of his approach on Fox News Sunday. Not surprisingly, health care lies at the core of his plan for cutting federal spending by $5 trillion over the next decade.

Specifically, Ryan wants to repeal the Affordable Care Act, or Obamacare, turn Medicaid into a block grant program for the states, and allow new Medicare beneficiaries the option of buying private insurance with a government voucher or premium-subsidy payment. Anyone 55 and over, however, is protected from future changes to Medicare. “You have to remember, all of that money that was taken from Medicare was to pay for Obamacare,” Ryan said, referring to the $716 billion the Affordable Care Act trimmed from Medicare provider payments. “We say we get rid of Obamacare, we end the raid, and we apply those savings to Medicare to make Medicare more solvent and extend the solvency of the Medicare trust fund.”

For a variety of reasons Ryan’s plan is DOA, especially since his blueprint relies on repealing Obamacare. The numbers also suggest the cost shifting in the Medicare premium subsidy idea will dramatically increase senior out-of-pocket health-care spending over time, largely because the value of the voucher is slated to rise at a much slower rate than health-care costs. But set those concerns aside for the moment. The biggest flaw in Ryan’s budget—one shared by other ambitious deficit-reducing plans in recent years—is protecting anyone 55 and older from shifts in Medicare policy. Big mistake.

Of course, the reason for segregating many boomers from reform is political calculation: The fear is that seniors will rebel at the ballot box against a major rewrite of the Medicare rules. Thing is, almost every New Year brings new rules, new coverage, and new deadlines. “Current beneficiaries are being affected by Medicare changes all the time,” says Jill Quadagno, professor of sociology at Florida State University.

There’s something unseemly and unjust about segregating an aging population of boomers from reform. Why should a large chunk of the massive baby boom generation—those 55 and over—not share in the gain and the pain, assuming a major overhaul is needed? “Personally, I find it insulting,” says Eric Kingson, professor of social work at Syracuse University. “Every generation is threatened by rising health-care costs.” Adds David Cutler, economist at Harvard University: “It’s ironic that protecting the young from greedy geezers means exempting the greedy geezers from pain and putting all the pain on the young.”

Perhaps worst of all, the political maneuver cynically feeds the false belief that federal public policy has become a zero-sum game, where one generation gains, say boomers, at the others expense of other generation, such as millennials—and vice versa. The big problem weighing on household budgets, state budgets, and the federal budget is high and rising health-care costs. Everyone has a stake—young and old—in bringing down the rate of health-care spending. Health-care economists have repeatedly shown that population aging is a relatively small factor behind the cost increase. Far more important is rapid technological innovation, followed by steep administrative costs and the transfer of resources into the medical-industrial complex. “Consequently, efforts to contain Medicare costs—without limiting coverage for the health care of older patients—should in principle focus on reforming the health-care system generally, not just Medicare,” wrote Robert Binstock, the late leading gerontologist.

In other words, let’s stop hermetically sealing off older people from the rest of society when it comes to health-care spending reform, let alone other entitlements. The young and old alike have a huge stake in designing a better system. After all, the U. S. pays more than twice as much per person for health care as the average for other wealthy countries. Bringing U.S health-care costs more in line with those of Germany, Switzerland, Canada, and the like while providing universal access will free up staggering resources for all generations. “One way or another, when medical costs increase, we all pay,” says Cutler. “The key is to lower total spending, not just spread it around in some different way.”

He’s right. To increase the pressure for smart reform, no one of voting age—especially those 55 and over—should be exempt from the impact of change. We’ll all be better off, politically and economically.

Chris_farrell
Farrell is contributing economics editor for Bloomberg Businessweek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace.

Soul Searcher
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus