Privatizing Medicare

Krugman weighs in,

1. Privatizing and voucherizing Medicare does nothing whatsoever to control costs. We’ve seen that from the sorry history of Medicare Advantage. I’m sure that the Republicans will claim savings — but those savings will come entirely from limiting the vouchers to below the rate of rise in health care costs; in effect, they will come from denying medical care to those who can’t afford to top up their premiums. […]

2. E.J. Dionne is right: This will be Obama’s defining moment. Will he stand up for the principle that society takes care of those in need? Or will he cave in? I wish I had confidence in the answer.

I sure hope someone in the administration or Congress is thinking about the third way: competitive bidding. It’s worth considering precisely because it addresses one concern Krugman raises, that vouchers won’t keep up with health care costs. It also addresses the other concern Krugman raises and has raised before, that vouchers will rise as fast or faster than health care costs.

Notice these two concerns are at odds, but both are serious issues. If we take them as such — seriously — we might consider proposals to address them. But I wouldn’t bet on it.

There’s another concern some have raised about Rep. Ryan’s plan for Medicare: it fundamentally breaks the social compact of of the program (see Jon Cohn). Why should workers today pay for rich benefits of seniors today on the promise that when they retire they get … vastly less? That strikes some as a fundamentally unfair approach, one that counters the original conception of the program. Unsustainable though it may be, a source of political support for Medicare (and Social Security) is the idea that one gets back at least what one puts in and just as much (in some sense) as one’s parents and grandparents.

This just raises another conflict, though it need not. It suggests that one cannot “save” the program without reducing benefits for future beneficiaries. But who says only future beneficiaries need to sacrifice? In other words, saving Medicare need not be a front in an intergenerational war. Can it be avoided? I wouldn’t bet on that either.

One could say similar things about Medicaid, by the way. There’s no law that says the poor must pay for reducing future budget deficits. But will they? You probably already know how I’d bet on that one too.

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