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At Age 46, Is Medicare Ripe For A Change?

Jul 26, 2011

Medicare, the federal entitlement program for the elderly and disabled, was signed into law by President Lyndon Johnson 46 years ago this week. Changes to the program, such as raising its eligibility age or requiring wealthier seniors to pay more for coverage, have been discussed in the debate over raising the federal debt ceiling and also by several commissions charged with finding ways to reduce federal spending, including on entitlement programs.

It remains unclear what role, if any, Medicare will play in the debt ceiling talks. The two proposals currently being considered  - from House Speaker John Boehner and Senate Majority Leader Harry Reid - do not include significant changes to Medicare.

Kaiser Health News asked experts to give us their thoughts on what would have to happen for Washington to decide if – or when – the time is right to revamp a popular program like Medicare. Here are edited excerpts of those interviews.


Jonathan Oberlander, professor of social medicine and health policy and management at the University of North Carolina - Chapel Hill:

The right time is in the eye of the beholder. What qualifies as a "major revamp" is a subjective judgment. The amount of savings in Medicare that they got in the [health law] was certainly more than I thought they were going to get going in to 2009, and I think it was fairly significant.

One lesson is that most of the major action in Medicare reform has come on occasions when the trust fund for [Medicare] Part A – which covers hospital care – was projected to be insolvent in a decade or less. The interesting aspect of the debt and deficit debate is that normally it’s very hard to get a major restructuring or reform in Medicare. The status quo is very strong. When there are immediate or soon-to-be-immediate trust fund warnings, the politics change, the boundaries bend, and you’re able to do things that just a few years earlier would have been inconceivable. The question is whether long-term problems, like the deficit, can bend the boundaries in the same way. You’ve seen that in the discussion, and the indication that the president was willing, evidently, to raise the retirement age in Medicare is an example of that. That’s the interesting question: can a debt crisis do the same political gymnastics that a trust fund crisis performs in Medicare?


Joseph Antos, health care policy scholar at the American Enterprise Institute:

You need a year that isn’t an election year and apparently now elections take two years. So basically you don’t have too many windows of opportunity. But if we roll into 2013 or 2014, no matter who’s president - with an economy that hasn’t improved much from where we are today, with a debt load that’s continuing and basically nowhere to turn because all the easy savings were already used up and there’s a limit to how far you can go in raising taxes - in other words, if we are against the wall, then we’ll begin to make a move that will be more than a day late and more than a dollar short.

This is not a question of willingness. If we had to depend on politicians being willing to do something hard like this it would never happen. Any political move to actually do it would be under great duress that would have to be felt by both political parties. Everybody has to agree that we don’t have any choice.

Robert Blendon, professor of health policy and political analysis at the Harvard School of Public Health:

It really has to be a real financial crisis. The problem with these "it-runs-out-of-money-in-15-years" argument for voters is: That’s not a current financial crisis. When you have very popular programs that also involve voters who care a lot about those programs, the only time you really have agreement is when there is almost no choice for political figures to deal with the situation. Unless there is a much closer "we-can’t-pay-the-bills-issue," only then are you going to have a huge re-do discussion about Medicare.

But it’s also important to understand in the politics of this: There are very different politics for what happens to payments to providers and pharmaceutical companies versus what happens to beneficiaries. [Cutting] beneficiaries has the highest political cost for a political leader to take action on. If you want to do this you have to do something that is bipartisan because you have to build in things that reassure people that your health bills upon retirement will be somewhat protected. And whoever is reassuring you cannot look like their principle interest also is just reducing expenditures. Otherwise that’s what you are going to think: these are just budget cutters.


Carroll Doherty, associate director, editorial, Pew Research Center for the People & the Press:

The public overwhelmingly believes Medicare has been good for the country, but is also acutely aware of the program’s troubled finances. A revamp of Medicare could potentially win public support, if it is viewed as means of securing the program’s finances to ensure benefits for future generations. But most Americans reject making changes in Medicare, or Social Security, to reduce the budget deficit: a recent survey by the Pew Research Center for the People & the Press found 60 percent saying it is more important to keep those programs’ benefits as they are, while just 32 percent said it is more important to take steps to reduce the budget deficit. In part, this reflects the fact that while the public views the deficit as an important and urgent problem, it is still not the top economic concern.

In our latest poll, released Tuesday, 39 percent cited the job situation as the [national] economic issue they were most worried about, while 29 percent said the deficit; those numbers have changed little since May, despite the intense focus in Washington on the debt and deficit. This attitude could change, but probably won’t until the public believes a major overhaul is necessary to save what is still a very popular program.


Sally Pipes, president and CEO of the Pacific Research Institute:

What might trigger this is if the U.S. credit rating goes down, when you see these things starting to happen, when people are starting to not have confidence in this economy -- that’s when you are going to have some programs change dramatically. If it were me, I would ‘voucher-ize’ Medicare and it would be means tested and raise the eligibility and not wait until 2033 to do all that. I think the age should be raised to 70. 

I’m part of the baby boomer generation and right now we are like a huge watermelon being pushed through a snake. We are going to be a large cost on the economy. We should allow the market to operate; people should be able to get the type of insurance that fits their own needs. I think it’s going to have to happen.


Ross Baker, professor of political science at Rutgers University:

It would probably take a crisis in Medicare akin to the one that affected Social Security in the 1980s. The survival of the entitlement itself was at stake. That was pretty generally acknowledged. There are people who don’t acknowledge the seriousness of the debt extension problem. So I think it would have to be something specific to the program itself and not a component of some other overall kind of fiscal problem.

If people looked into the abyss of immediate Medicare insolvency, I think that would probably be the kind of event that might prompt action. All of a sudden the Medicare trustees say this program is on the brink of insolvency. And the ability of the program to guarantee benefits for eligible people is in jeopardy, and that it is almost on top of us. It’s not years down the line. People don’t respond to those kinds of warnings. But in a sense to say that in a few months Medicare will be unable to honor its obligations.

Brian D. Smedley, vice president and director of the Health Policy Institute of the Joint Center for Political and Economic Studies:

I’m not a Medicare expert but clearly I think the budget conversation has identified the battle lines politically. I think Medicaid is much more vulnerable in this situation, because the population, which is mostly people of color, is less likely to vote. The health of the communities of color are going to define the economy. We need to invest in preventative care to create healthy communities -- these are the things we have to do to reduce health care costs and there are ways to structure programs like Medicare and Medicaid to keep that in mind.

I think there is a strong case to be made to restructure these programs. We need to forecast what our nation will look like in 20, 30 years and consider a major structural change. For example, if Medicaid were to be turned into a block-grant program many of the benefits that are offered right now to patients would not be there – it would be up to the states if they wanted to keep them or not. Things like periodic screenings and other services for young people who need these services. If we can ensure that Medicaid rates are closer to Medicare reimbursement rates then more providers will be willing to accept Medicaid patients.

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