Medicare, redistribution, and politics

The very fact that Medicare is a mildly progressive income transfer program underlies much of the contemporary political debate, even if that dimension is rarely acknowledged. Efforts to transform the program from one of defined benefits to defined contributions, to encourage medical savings accounts (MSAs), or to raise the share of program costs paid by beneficiaries are all part of the broader political and ideological attack on all policies that redistribute income or wealth from the more affluent to the less affluent (policies that redistribute income in the other direction remain much less controversial). Indeed, even much of the insistence that Medicare and Social Security face a “crisis” because of the aging of the baby boomers is rooted in visceral hostility to redistributive policy in all of its forms; the baby-boomer crisis simply goes away if one allows into the discussion the possibility of increased taxes on the more affluent. […]

[However,] the argument that Medicare must somehow be insulated from the day-to-day workings of the political system is, at root, an argument that in some basic sense we have lost the capacity as a nation to govern ourselves. The flaws in our current political system are real and profound, and there is a long-standing tradition in American politics in which academic and social elites have sought to insulate one public function or another from “politics.” That tradition has given us civil service; the Interstate Commerce Commission; and independent, ineffectual boards of public health. But that tradition is, at root, fundamentally antidemocratic.

Inside the psychic Beltway occupied by the policy elites, there is broad consensus that “we” could run Medicare, or other parts of the health care system, much better if only the ugly exigencies of the political process could be pushed aside. But if we take that approach to Medicare—which affects almost every American family, reflects a profound and long-standing intergenerational compact, and often literally involves matters of life and death—then we are saying either that the American people cannot be trusted with something so large and so important or that we cannot trust our political processes to adequately protect the American people. Either conclusion would suggest that our problems are far worse than the pending insolvency of the Hospital Insurance trust fund or the economic impact of the retirement of the baby boomers.

Bruce Vladek’s words (pdf, ungated) were published over a dozen years ago. They hold up pretty well, don’t they?


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