A Tale of Two Medicares

14 Aug

With the announcement of Paul Ryan as Mitt Romney’s running mate in the 2012 presidential election, American voters are now faced with an easy decision. I say this because the two sides (Romney and Obama) espouse starkly different positions on almost every issue. I think it’s more difficult for people to identify their preference among two choices if those choices aren’t easily distinguished from one another, and easier the more they different they are. I think you’d probably agree. Today, I want to focus on just one major distinction between the two campaigns: the Medicare program.

Let’s start with some basics, so that we’re all on the same page. Medicare is a federal health insurance program that provides coverage for US citizens over the age of 65 as well as those under age 65 who are disabled. American workers pay into the program through a small deduction from their paychecks, and everyone qualifies for the program once they turn 65 (if not before due to disability). The rich and the poor alike get Medicare. Unlike Medicaid, the states don’t pay anything towards Medicare, which helps to simplify our discussion here.

The other thing that you might have heard about Medicare is that, similar to Social Security, it is going bankrupt. Now, I happen to be of the opinion that federal programs can never go “bankrupt,” because the federal government has the ability to print more money (ignore the implications for inflation for the moment), but the general idea is that Medicare costs are outpacing Medicare revenues. In short, there is widespread agreement that the program needs to be reformed if it is to continue providing our seniors with health care coverage.

With the passage of the Affordable Care Act, President Obama and the House and Senate Democrats put in place a plan that improves care for seniors by shrinking the amount of  money they have to pay out-of-pocket for their prescription drugs (essentially undoing a gift to the pharmaceutical industry from George W. Bush et al.) and provides free preventive care. At the same time, the law identified enormous inefficiencies in the program, and was able to cut some $700 billion from the program. In recent days, critics have accused President Obama of “stealing” from Medicare as if he was somehow syphoning off the billions to his private Swiss bank account. Ladies and gentlemen, if that accusation is true, then I submit that you are stealing from yourself everytime you adjust your thermostat or turn the lights off in a room to save money on your electric bill. Aside from removing these inefficiencies from the program to save money, Obama leaves the Medicare program just as it is. That program that seniors love so much that they don’t want government to touch it, remains intact.

On the other side of this issue, is what Paul Ryan has proposed: dismantling the Medicare program as we know it and replacing it with a voucher system that would permit seniors and the disabled to go shopping on the private market for their own coverage. The inevitable result of that will be that healthier older adults will end up with better and less expensive coverage than sicker ones. That, of course, assumes that the amount of the subsidy will even be sufficient enough for them to purchase coverage. What’s particularly ironic is that this approach, which Republicans support, is the same mechanism that the insurance exchanges established by the Affordable Care Act rely on, which–in that case–Republicans oppose.

The bottom line is this: If you like Medicare the way it is, you should vote for Obama in November. If you’d rather trade in your Medicare coverage for whatever your federal subsidy can buy you from a health insurance compay, you should vote for Romney in November. If you’re undecided, take a moment to reflect on how well the housing market performed when the private market was allowed to do as it pleased with minimal federal regulation.

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Posted by on August 14, 2012 in Uncategorized


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