Joe Lieberman is out today with a plan to reduce Medicare expenditures without privatizing the program. The essence of his alternative is just to “do less Medicare.” This takes a few forms. Most crudely, right now if you’re 65, you get Medicare. If you’re 66, you also get Medicare. Lieberman wants to change that so if you’re 65, you don’t get Medicare, and if you’re 66, you also don’t get Medicare. Obviously this does, in fact, reduce Medicare outlays, though Igor Volsky has the facts and finds that the actual savings here are kind of surprisingly low.
The larger issue here, if you ask me, is that though this really is preferable to some other ideas I’ve heard it really fails to put the Medicare issue in the proper context.
Health care services are expensive in the United States of America and the cost is growing at a rapid rate. Consequently, all endeavors that pay for health care services are costly and increasingly so. Medicaid is big burden on state governments. Public sector worker health care costs are a big burden on government at all levels. Medicare is a big burden on the federal government. Tax subsidies for private employer-provided insurance put a big hole in the federal deficit. Employee health costs are a big burden on large firms. If you look at any one of these things in isolation, you can wind up losing perspective. It’s important to keep in mind that all major modes of delivering health care services in the United States benefit from government subsidies, and they’re all expensive. But Medicaid is considerably cheaper than Medicare, and Medicare is considerably cheaper than private insurance. The right kind of policies try to reduce cost pressure throughout the system with minimal cost to patient wellbeing. The evidence, both from comparing different sectors of U.S. health care to each other and from comparing U.S. health care to foreign health care, indicates that getting the state more deeply involved is the way to do this. That’s why the CAP plan for the long-term budget deficit reduces Medicare outlays by reforming the entire system.