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It’s About Values: The Looming Fight Over Medicare
posted 03.09.2017

By Nancy J. Altman

During the campaign, Donald Trump promised repeatedly that he would not touch Social Security, Medicare or Medicaid. Nevertheless, two days after the election, Speaker of the House Paul Ryan (R-WI) announced that he planned to push legislation that replaced Medicare’s health insurance with a program in which older adults and people with disabilities would be required to purchase private health insurance, armed only with a cash payment from the government, an amount of money that would vary by region and likely erode over time. He made the case for radically transforming Medicare by falsely claiming that, “because of Obamacare, Medicare is going broke.”

We Can Afford Medicare for All

It is important to recognize the truth: Whether to expand Medicare, cut it or radically transform it into a voucher program is a matter of values, plain and simple. There is no question that, as the wealthiest nation in the world at the wealthiest moment in our history, the United States can afford, as other industrialized countries can, not just today’s Medicare, but Medicare for All—if that is what the American people want. Medicare was enacted in 1965 as simply a first step toward Medicare for All.

Today, Medicare provides health insurance for more than 55 million older adults and people with disabilities. Though those two groups have the greatest medical needs, Medicare is the part of the nation’s healthcare system that works best. Its per capita administrative costs are lower than those of private sector health insurance. In 2015, for example, administrative expenses accounted for just 1.4 percent of all Medicare expenditures, while private health insurers have combined administrative expenses and profits that average 16 percent annually per enrollee.

Medicare’s structure resembles that of the vast majority of systems in other industrialized countries, which have universal coverage of their citizens at a fraction of the cost and, often, with better health outcomes. In contrast, the rest of the American healthcare system is an inefficient hodgepodge of programs including employer-provided plans, Medicaid and SCHIP (State Children’s Health Insurance Program) for the lowest income Americans, and the now-endangered marketplaces set up by the Affordable Care Act—an inefficient patchwork system that leaves many Americans with no health insurance whatsoever. This haphazard, inefficient and inadequate system is not seen anywhere else.

When President Franklin Roosevelt created Social Security, he explored proposing universal, government-provided health insurance, but feared that including it would give opponents the ammunition needed to block the entire Social Security bill. His successor, Harry S. Truman, championed universal health insurance, but was blocked by Republicans. President Lyndon Johnson, legislative genius that he was, decided to use an incremental approach. He and his advisors debated whether to start with retirees, a population desperately in need of health insurance, or children, who would be less expensive and for whom early intervention could mean a lifetime of good health. They decided to begin with older adults, because the need was so great.

Despite higher medical needs, on average, most older adults had no health insurance at all. Some could not obtain insurance at any cost because of pre-existing conditions. Those who could obtain insurance generally paid three times more than younger people despite having, on average, half the income.

Johnson successfully shepherded Medicare through Congress, and it joined Social Security in establishing the foundation of economic security for our nation’s elders. The plan was that Medicare would quickly be followed by a Medikids program covering our nation’s children, and other expansions, with the ultimate goal of Medicare for All.

But sadly, it was not to be. Though President Richard Nixon expanded Medicare to cover people with disabilities, conservative forces, which preferred private-sector solutions and expansion of means-tested Medicaid, prevailed.

Turning Back the Clock on Medicare

Consistent with that private-sector ideology, President Bill Clinton and his wife, whom he charged with developing the new Administration’s health insurance proposal, followed a model first proposed by the conservative Heritage Foundation—mandating that people obtain private health insurance, and providing lower income Americans with subsidies to purchase it.

The Clintons’ effort did not succeed, but two decades later, President Barack Obama passed a very similar model in the form of the Affordable Care Act (ACA). The ACA was better than nothing and successfully insured millions of Americans. But it was deeply unpopular.

Ironically, Speaker Ryan, bent on repealing Obamacare, proposes to convert Medicare into Obamacare, but without protection for those with pre-existing conditions and without any price protection. He opposes Obamacare, though it relies on the private sector, because it regulates the private sector and provides government subsidies. He opposes traditional Medicare because it is government-run. As perhaps just a first step, he proposes requiring older adults and people with disabilities, now covered under Medicare, to rely on the private sector, like most other Americans, but with government vouchers.

Paul Ryan’s ally, and someone who shares his views, is Representative Tom Price, President Trump’s choice for Secretary of Health and Human Services. Price announced, after the election and while he was still serving as the powerful Chairman of the Budget Committee in the House of Representatives, that he wanted to act on the Ryan plan before the end of 2017. President Trump has been unsettlingly quiet on the Ryan-Price plan to dismantle Medicare this year.

It appears the fight over Medicare is coming. Despite Trump’s campaign promises, his Republican Party has long advocated (and is now poised) not just to repeal Obamacare, but also to block-grant Medicaid and voucherize Medicare. This will turn back the clock.

Thrown into the arms of private health insurance companies, armed only with cash, with no pertinent government regulation or other government involvement, people with disabilities and many older adults will be unable to secure health insurance at any price, because of pre-existing conditions. Others who are eligible will be unable to afford insurance because of the cost. Moreover, even those who can, thanks to the government voucher, be able to afford the insurance at the program’s start, may lose that ability as the program progresses and they age. Ryan is not proposing indexing the voucher amount to rising healthcare costs, but to measures that historically have grown much slower than healthcare costs. Consequently, the value of the voucher is likely to erode rapidly.

As they do with respect to their radical Social Security proposals, Republicans promise not to affect anyone ages 55 or older, but there is reason to be highly skeptical. If Medicare only covers those currently ages 55 and older, it will cover only a small, declining part of the population. And it will be a small, declining part of the population with higher and higher healthcare costs and less and less political clout—not a recipe for improved healthcare coverage and government protection.

The Battle Ahead

What makes the upcoming fight difficult is that it is likely to be done behind closed doors, using expedited and arcane procedures. When President George W. Bush sought to privatize Social Security, he announced his intentions and toured the country to explain his proposal. In sharp contrast, today’s Republicans are using a fast-tracked method known as reconciliation, which limits debate and avoids the filibuster, to repeal Obama-care, and plan to do the same to end Medicare as we know it.

Moreover, Price is a champion of changing the budget rules so that Social Security, Medicare and Medicaid would no longer be mandatory spending, but rather subject to annual budget caps. The debate over these will be technical and hard to cover but the result, if enacted, will be deep cuts in Social Security, Medicare and Medicaid in future years, with members claiming that they have no choice. (This budget approach is an alternative way to cut the three programs if a fast-track commission for Social Security, voucherizing Medicare and block-granting Medicaid—all ideas being discussed—does not happen.)

Making the fight even more difficult is that those seeking the changes will defend them as “saving” Social Security and Medicare. But the American people should not be fooled. If Social Security or Medicare is transformed, it will be for ideological reasons. The result will be less adequate coverage for all of us, but especially, our most vulnerable fellow citizens. The right policy, supported overwhelmingly by the American people, is to expand Social Security and expand Medicare. Certainly, no one voted to destroy them.

Nancy J. Altman is the founding co-director of Social Security Works and co-chair of the Strengthen Social Security Coalition, both in Washington, D.C.

Editor’s Note: This article appears in the March/April, 2017, issue of Aging Today, ASA’s bi-monthly newspaper covering issues in aging research, practice and policy nationwide. ASA members receive Aging Today as a member benefit; non-members may purchase subscriptions at our online store.


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