Phase Out Credibility

Given that one key part of the pitch for Paul Ryan’s plan to phase Medicare out and replace it with a private voucher system is the idea that anyone 55 years or older will be unaffected by the plan, it’s probably worth asking about the credibility of this promise. Today, people who are 55 years or older can count on political resistance to taking their Medicare away for two reasons:

— People 55 years and older don’t want to lose Medicare.
— People 54 years and younger want to have Medicare some day.

If a “divide and conquer” strategy succeeds in abolishing Medicare for people born after 1956, then what happens to this political economy? Over time you’ll have a growing set of private voucher firms lobbying for more people to lose Medicare and be put into the voucher pool. You’ll also have a declining set of people born before 1956 to object to Medicare abolition. And you’ll have an ever-growing pool of people born after 1956 who’ve been told that they’ll never benefit from Medicare no matter what happens, but who are being asked to pay the taxes that finance it.

That doesn’t strike me as a remotely sustainable equilibrium. If you take Medicare and change it, you can phase those changes in over time. But you can’t introduce a radical discontinuity into the program and then promise everyone over a certain age that the discontinuity won’t impact them. Obviously some people will die before the change is universalized, but universalization is made all but inevitable by introducing the discontinuity.